AML and Anti-Fraud in the Crypto Industry: Complete Guide for 2026

Crypto has always moved faster than regulation. For years, that gap allowed many crypto businesses to treat AML as a set of best practices that could be adjusted, simplified, or postponed while growth took priority.

In 2026, that gap is closing. For the first time, AML and anti-fraud in the crypto industry are no longer optional or experimental. They are becoming an industry standard.

This shift is not driven by regulation alone. Fraud has become more industrial, more automated, and significantly harder to detect with traditional, manual controls. As a result, weak or fragmented AML setups are no longer just a compliance risk. They directly affect onboarding speed, operational costs, and a company’s ability to scale safely.

This is where technology becomes critical.

In 2026, effective AML in crypto is no longer about having policies on paper. It depends on whether your KYC and risk controls can keep up with real-world fraud, regulatory expectations, and business growth at the same time.

In this guide, we break down what CASPs should expect in 2026, the requirements applied, and steps you need to take if you’re looking to start a new project or expand into new markets.

Regulatory Landscape for 2026: What’s Changing for CASPs

For a long time, crypto regulation looked fragmented. Different rules, different levels of enforcement, and plenty of room for interpretation. In 2026, that fragmentation starts to disappear.

Across major jurisdictions, regulators are no longer focused on defining what crypto is. Instead, the focus is shifting to how crypto businesses operate on a day-to-day basis, at scale, and under stress.

Europe: MiCA becomes operational

In the EU, 2026 is the year when MiCA starts shaping real enforcement. Licensing under MiCA is no longer just a legal milestone. Regulators are looking closely at whether licensed crypto businesses can actually demonstrate control over their operations. That includes how users are onboarded, how risks are monitored over time, and how compliance decisions are documented.

AML and KYC expectations rise accordingly. Static, one-time verification is no longer enough. Authorities expect ongoing monitoring, dynamic risk assessment, and clear evidence that KYC processes evolve as the business grows. Governance also comes under pressure: MLRO responsibilities must be clearly defined, reporting lines documented, and audit trails available on demand.

For custodians, exchanges, and token issuers, this means one thing in practice: AML processes must be embedded into daily operations, not layered on top of them.

United States: targeted pressure, high impact

Unlike the EU, the US does not introduce a single comprehensive crypto framework in 2026. Instead, regulators apply pressure where risks are highest.

Stablecoins face stricter AML scrutiny, particularly around transparency and source-of-funds controls. Interactions with mixers and anonymity-enhancing tools are treated as high-risk activity, even when exposure is indirect. At the same time, some crypto business models face growing uncertainty around broker-dealer classification, which can significantly expand AML and reporting obligations overnight.

The practical effect is clear: US-facing crypto businesses must be able to demonstrate strong controls quickly. Explaining intentions is no longer enough — regulators expect evidence.

APAC: growth markets with shrinking tolerance for AML gaps

In Asia-Pacific, growth and regulation move in parallel. Jurisdictions such as Singapore, Hong Kong, and Japan are tightening oversight of crypto service providers while actively positioning themselves as regulated hubs. The expectation is not only compliance, but technological maturity, particularly in KYC and transaction monitoring.

India follows a different path, combining high regulatory control with tax-driven AML measures. For crypto businesses, this translates into heavy reporting requirements and limited tolerance for informal processes.

Across APAC, the message is consistent: scaling is possible, but only for teams that can demonstrate control.

FATF and the Travel Rule: enforcement replaces experimentation

The FATF extended the Travel Rule to virtual assets and VASPs back in 2019 through Recommendation 16, and jurisdictions have been expected to implement these standards into national law ever since.

What makes 2026 important is not new rules, but enforcement maturity. By 2025–2026, most major markets have already transposed Travel Rule requirements into local regulation. This is especially clear in the EU, where Travel Rule obligations apply alongside MiCA, and in APAC hubs such as Singapore, Hong Kong, and Japan, where compliance is built into licensing regimes.

As a result, regulators are no longer assessing intent or policies. In 2026, they test whether Travel Rule compliance works in practice: whether customer identity data is properly collected, whether originator and beneficiary information can be transmitted to other VASPs, and whether cross-border data exchange functions reliably. Manual workarounds and partial implementations are increasingly treated as non-compliant.

What Сrypto Businesses Must Have in Place in 2026

Now, let’s understand how regulations translate into operations.

Identity Verification

In the EU, identity verification requirements for crypto businesses are enforced through MiCA, which aligns crypto service providers with the broader EU AML framework. Regulators expect businesses to verify customer identity using reliable documents and to confirm that the person presenting the document is physically present.

Similar expectations apply in Singapore, Hong Kong, and Japan, where licensing regimes require strong customer identification and safeguards against impersonation and misuse.

In practice, this means crypto businesses must:

• Verify identity documents.

• Confirm presence through selfie and liveness checks.

• Prevent the use of synthetic or duplicated identities.

Failure to demonstrate these controls is treated as a basic KYC gap.

Ongoing Monitoring

Under MiCA, EU crypto providers must monitor customer activity and identify suspicious behavior over time. In the US, regulators focus on whether crypto businesses can detect unusual patterns, changes in transaction behavior, and exposure to higher-risk jurisdictions.

APAC regulators apply the same principle through ongoing supervision: monitoring must be continuous and risk-based.

In practical terms, regulators expect CASPs to:

• Monitor transactions on an ongoing basis.

• Identify behavior that deviates from the customer’s profile.

• Adjust risk assessments when activity changes.

Sanctions, PEP, and Adverse Media

In the EU, these obligations stem from AML legislation applied alongside MiCA. In the US, sanctions enforcement is particularly strict and closely tied to AML examinations. In APAC markets, screening is embedded into licensing and supervisory expectations.

Regulators expect screening to be:

• Performed at onboarding.

• Repeated over time.

• Properly documented.

If a business cannot explain how alerts are reviewed and resolved, regulators assume the screening process is ineffective.

Wallet Risk Assessment

EU regulators expect crypto providers to understand on-chain exposure as part of suspicious activity detection. In the US, scrutiny around mixers, bridges, and indirect exposure has made wallet analysis a critical control. APAC regulators increasingly test whether businesses understand the blockchain activity connected to their users.

In practice, this means regulators expect:

• On-chain transaction analysis.

• Identification of high-risk exposure.

• Integration of wallet risk into customer risk assessments.

Source of Funds and Source of Wealth

Source of funds and source of wealth checks are enforced more consistently in 2026, particularly for higher-risk customers.

In the EU, these checks are linked to enhanced due diligence requirements. In the US, they often arise through banking partner scrutiny and regulatory examinations. In APAC, regulators expect crypto businesses to demonstrate reasonable explanations for how customers acquired their assets.

For crypto businesses, this means:

• Assessing wallet history against declared sources.

• Looking for consistency over time.

• Combining on-chain data with off-chain information.

Regulators are not looking for perfect certainty. They are looking for reasonable, documented conclusions.

The AML & KYC Toolkit CASPs Need to Scale in 2026

Regulatory requirements make one thing clear: running crypto KYC and AML without automation is no longer realistic. If you want to stand up to modern fraud schemes and scale the business at the same time, parts of your KYC and AML processes have to be automated.

A KYC system that actually supports CASP growth should include the following.

Modular and AI-Powered Identity Verification

Identity verification is the base layer of KYC. If it doesn’t scale, the business doesn’t scale either.

For CASPs, document coverage matters. Users come from different countries with different IDs, and limited support quickly turns KYC into a growth bottleneck. Allpass.ai supports verification of more than 14,000 document types, allowing teams to onboard users globally without rebuilding KYC flows market by market.

At the same time, identity fraud has become more sophisticated. Synthetic identities, reused documents, and deepfakes are now common. This is why identity verification must rely on automation and AI, not manual checks.

Allpass.ai allows combining document verification with selfie and liveness checks. AI is used to automatically assess whether the document is genuine, whether the person in the selfie and liveness check is real, and whether the same identity has already appeared in the system.

Finally, KYC should be modular. Low-risk users should pass quickly, while higher-risk profiles trigger deeper checks automatically. With Allpass.ai, verification flows can be adjusted without engineering work, keeping onboarding fast without lowering control.

Automated AML Screening with Large Database

With Allpass.ai, AML monitoring and sanctions screening are part of the same control layer. You add this step to your flow, and the system runs the checks automatically.

Allpass.ai performs the initial AML and sanctions checks and then continues monitoring users at the frequency you set. The system screens against more than 3,000 sanctions, watchlists, and PEP lists. This is not something a human team can realistically do manually, neither consistently nor at scale.

Automation does not remove control. You can still run manual checks when needed, for specific users or edge cases. Both automated and manual reviews live in the same workflow.

If a new sanctions match appears, risk changes, or a suspicious signal is detected, you receive an automatic notification.

Flexible Wallet Risk and Transaction Monitoring

Like AML screening, you should be able to run crypto KYT automatically and as part of enhanced due diligence.

When KYT is built into an automated flow, Allpass.ai collects and analyses wallet data as part of the check. This includes on-chain activity, source of funds, and use of funds, giving teams a clear view of where funds come from and how they are moved. KYT is supported across a defined set of blockchains, allowing CASPs to apply consistent controls to the networks they operate on.

In addition to automated KYT checks, teams can run manual wallet and transaction searches when a deeper investigation is required. Wallets can also be added to ongoing monitoring, so any future activity is tracked and reassessed automatically.

To Sum Up

If you want to grow and scale a crypto business, automation is the only option. Manual compliance does not scale, and many existing KYC and AML systems become a bottleneck as volumes increase, either because of cost, rigid configuration, or operational complexity.

Allpass.ai removes those limits.

For early-stage CASPs, it provides automated KYC, AML, and crypto KYT from day one — enough to get licensed and start operating without building a heavy compliance setup.

For established businesses, it replaces inflexible and expensive systems with automation that can be configured without code and scaled without linear cost increases.

If growth is part of your plan, your compliance stack has to scale with it. Try Allpass.ai for free and see how automated compliance works in practice.