Copyright indiatimes
A report by the Financial Action Task Force (FATF), Comprehensive Update on Terrorist Financing Risks, arrives at a critical inflection point in the evolution of the global financial system. For those operating at the frontier of finance, whether in crypto, fintech infrastructure, or compliance technology, this report, released in July 2025, is not just a diagnostic of present dangers but a strategic roadmap for future resilience.Income Tax GuideIncome Tax Slabs FY 2025-26Income Tax Calculator 2025New Income Tax Bill 2025While many jurisdictions have taken important steps to address terrorist financing, the report finds that 69% of jurisdictions assessed by the FATF and the Global Network exhibited major or structural deficiencies in effectively investigating, prosecuting and convicting terrorist financing cases. What is most striking about the report is not merely the scale or diversity of the threats, which range from lone actors exploiting crowdfunding platforms to globally networked terrorist groups moving funds via trade-based laundering, but the subtle ways in which financial innovation is being co-opted for illicit purposes. Virtual assets, blockchain anonymity tools, unregulated money value transfer systems, and even seemingly benign platforms such as online donations have all become part of a complex ecosystem vulnerable to abuse.This isn’t a call to panic; it’s a call to rethink our role as ecosystem builders. The report highlights an essential truth– the infrastructure we build, the compliance culture we nurture, and the cross-border standards we advocate for will either close the door to terrorist financing or leave it dangerously ajar. At this moment, the private sector, particularly the crypto and fintech sectors, can no longer operate as passive recipients of regulation. We must be proactive contributors to the integrity of the financial system.One of the key messages from the FATF is the inadequacy of traditional compliance tools in addressing new-age risks. Static KYC and box-ticking AML are relics of an analog era. Today’s financial actors must embrace dynamic, risk-based frameworks that evolve alongside emerging threats. This means investing in adaptive transaction monitoring systems, leveraging artificial intelligence (AI) for pattern recognition, building interoperability between exchanges and banking systems, and ensuring traceability without compromising user privacy.Spotlight Wire Compliance should not be an afterthought or a regulatory checkbox; it should be a design principle. Financial integrity, if embedded deeply into the architecture of platforms, becomes a strategic differentiator. It builds trust with partners, regulators, and users alike. And in a world where reputational risk travels faster than capital, this trust is non-negotiable.Another powerful insight from the FATF’s report is the danger of regulatory fragmentation. Jurisdictions with weak supervision, poor data-sharing mechanisms, and no ultimate beneficial ownership transparency create systemic vulnerabilities. The report calls out the risks of “regulatory arbitrage” when bad actors route funds through loophole-prone regions and reminds us that no compliance regime is truly effective in isolation. What we need is collective intelligence. Inter-governmental coordination, public-private partnerships, and supranational standards must move from aspiration to execution.Importantly, the FATF doesn’t demonise innovation. It recognises the transformative potential of technology in driving financial inclusion, efficiency, and transparency. However, it insists rightly that this innovation must be responsible. As builders, we must rise to this challenge not just by following rules, but by shaping the norms, tooling, and best practices of a safer financial future.The crypto industry, in particular, has a chance to lead here, not by defensively pushing back against every regulatory development, but by demonstrating how programmable finance can be auditable, compliant, and secure by design. From zero-knowledge proofs to smart contract auditing, from decentralised identity protocols to real-time chain analytics, we have the tools. What we need is the will to embed them into our core operations. As a new sector, the responsibility falls upon us, the industry participants, to not only develop solutions for ourselves but also for the sector and the nation as a whole. It is therefore inspiring to see a lot of different startups emerging from India which are not only talking about solving problems using Web3 but also solving problems that exist within the Web3 sector - chiefly tracking, forensics and supervision. Ideally, the Web3 world is ripe for experimentation and innovation in RegTech - another important subsector within the financial technology space, too. Overall, FATF’s 2025 report isn’t just about risk; - it’s about responsibility. It’s a prompt to future-proof not just the products, but the principles. As the global financial map is redrawn, those who invest in financial integrity today will own the trust layer of tomorrow.*By Sumit Gupta, Co-founder CoinDCXDisclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The above content is non-editorial, and TIL hereby disclaims any and all warranties, expressed or implied, relating to the same. TIL does not guarantee, vouch for or necessarily endorse any of the above content, nor is it responsible for them in any manner whatsoever. The article does not constitute investment advice. Please take all steps necessary to ascertain that any information and content provided is correct, updated and verified.
