The rise of stablecoins has transformed the financial landscape, offering faster, programmable payments while introducing complex regulatory and compliance challenges. As banks and financial institutions increasingly engage with stablecoin issuers, managing associated risks—regulatory, cybersecurity, operational, liquidity, and counterparty—has become paramount.
Recent updates from the Wolfsberg Group, combined with insights from TRM Labs’ recent session on the GENIUS Act and the appointment of Luke Dufour as Compliance Advisor in EMEA, signal steps forward for mitigating financial crime risks in this evolving ecosystem.
The Wolfsberg Group, an association of 12 global banks focused on financial crime risk management, released guidance on September 8, 2025, outlining principles for banks offering services to fiat-backed stablecoin issuers.
This guidance emphasizes the importance of leveraging on-chain insights to assess and monitor issuer risk profiles.
Banks must understand how issuers manage their own on-chain risks, including the transparency and centralization of blockchains where tokens are launched.
The Wolfsberg Group recommends that banking institutions conduct thorough due diligence during onboarding, evaluating issuers’ risk appetites—whether they prioritize regulated, low-risk partners or engage with unregulated entities in higher-risk jurisdictions.
Ongoing monitoring is critical, with banks encouraged to use blockchain analytics to verify issuers’ on-chain behavior aligns with stated risk profiles.
For instance, scrutinizing transactions involving high-risk wallets through multiple hops can help banks manage indirect exposure.
Tools like Elliptic’s Issuer Due Diligence solution align with this guidance, enabling banks to integrate blockchain analytics into existing compliance frameworks efficiently.
Complementing the Wolfsberg guidance, TRM Labs’ session on the US Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, now law, provides insights for compliance teams.
The GENIUS Act establishes clear rules for stablecoin issuance, reserve requirements, and anti-money laundering (AML) obligations, reflecting growing concerns about illicit finance risks post-distribution.
The webinar, featuring professionals like Angela Ang, Aaron Chua, and Rodrigo Peiteado, highlighted the need for proper onboarding and tailored transaction monitoring to balance risk management with customer experience.
Stablecoin transfer volumes reached USD 35 trillion in 2024, surpassing Visa and Mastercard, with an average transfer size of USD 675,000, underscoring institutional adoption and heightened compliance responsibilities.
TRM’s blockchain intelligence tools, such as the Detect module, enable real-time wallet activity monitoring, flagging unexpected fund movements to mitigate security incidents.
The T3 Financial Crime Unit, a partnership with TRON and Tether, further supports asset recovery by freezing over USD 200 million in illicit assets since its inception.
Strengthening TRM Labs’ commitment to global compliance, Luke Dufour’s appointment as Compliance Advisor in EMEA enhances the firm’s regional expertise.
With extensive experience in regulatory affairs and financial crime prevention, Dufour will guide crypto businesses and financial institutions in navigating Europe’s complex regulatory landscape, including the EU’s Markets in Crypto-Assets (MiCA) framework.
His role is pivotal as jurisdictional fragmentation complicates compliance, requiring firms to align with local regulations while maintaining global interoperability.
Together, these developments underscore the importance of proactive risk management.
Banks must implement proper Know Your Customer (KYC) and customer due diligence processes, conduct ongoing transaction monitoring, and screen against sanctions lists to comply with the Financial Action Task Force (FATF) Travel Rule.
Clear policies favoring regulated, fully reserved stablecoins and collaboration with issuers through initiatives like the T3 unit are essential for asset recovery and compliance.
As stablecoin adoption grows, tools like TRM’s Wallet Screening and Beacon Network, launched with players like Coinbase and Binance, provide real-time intelligence to block illicit funds, reinforcing the ecosystem’s integrity.
In a post-GENIUS Act environment, financial institutions must adopt a risk-based approach, leveraging blockchain analytics and public-private partnerships to navigate stablecoin complexities.
By aligning with Wolfsberg’s principles and TRM’s expertise, banks can mitigate financial crime risks while fostering advancements in digital finance.