Daily Compliance Brief — Crypto Fraud and Sanctions Risks Converge in Supervisory Messaging

January 19, 2026

Signal

Recent supervisory communications and public remarks from regulators in the United States and Europe highlighted increasing overlap between crypto-enabled fraud schemes and sanctions risk. Authorities noted that fraud proceeds are frequently routed through digital asset platforms with weak controls, sometimes intersecting with sanctioned jurisdictions or entities.

Regulators emphasised that virtual asset misuse is no longer treated as a discrete fraud issue, but as a compound financial crime risk involving sanctions evasion, laundering of proceeds, and cross-border exposure. Messaging underscored expectations that firms understand end-to-end transaction flows rather than relying solely on onboarding checks.

Why it matters

For compliance teams, this convergence raises expectations around integrated monitoring of fraud, AML, and sanctions risks within crypto-related activity. Segmented control frameworks may fail to detect patterns where fraudulent funds move rapidly into higher-risk jurisdictions or counterparties.

Institutions with exposure to digital assets should reassess transaction monitoring scenarios, customer risk scoring, and escalation pathways to ensure crypto-related alerts are reviewed through both fraud and sanctions lenses. Failure to connect these risks may be viewed as a material control gap rather than a scope limitation.