BIS Flags Self-Custody Crypto as Emerging AML Weak Spot
The Bank for International Settlements warns that self-hosted crypto wallets could become the next frontier for money laundering evasion. As regulators tighten traditional payment rails, illicit flows may migrate to these unmonitored channels.
Unlike custodial wallets, self-hosted versions operate without intermediaries performing due diligence. Transactions settle on permissionless blockchains, creating what the BIS calls 'the lowest probability of detection' for financial crimes.
The EU case study reveals a regulatory paradox: while cash remains the most opaque instrument physically, self-custodied crypto offers greater digital anonymity with global reach. This structural distinction makes wallet-based transactions potentially more attractive for illicit activity than physical currency.
