Digital Finance Upheaval Exposes New Cross-Border Laundering Risks, Angelini Warns

Speaking in Rome on November 28, 2025 at the UIF Bocconi Workshop on economic crime, Paolo Angelini, Deputy Director General of the Bank of Italy, delivered a detailed examination of how rapid shifts in digital finance are transforming the mechanics of illicit money movement, creating operational blind spots that European authorities are struggling to close. He argued that the accelerating adoption of digital tools by criminals has outpaced the regulatory frameworks meant to contain them, reshaping laundering practices and complicating oversight.

Angelini explained that criminal groups are increasingly turning to cryptoassets—particularly tools designed to operate outside the reach of traditional supervision—to move and obscure illicit proceeds. While many flows still pass through regulated intermediaries, he noted that a growing segment now relies on self-custodied wallets that enable users to hold and transfer substantial value with minimal traceability. These devices, he observed, function much like high-capacity digital analogues of cash containers, permitting large-scale value storage without physical bulk and allowing criminals to shift away from risk-heavy cash transport into more discreet digital methods. Because cryptoassets were created to reduce reliance on intermediaries, Angelini stressed that this architecture poses a structural problem for AML systems built around supervised institutions. Even with the EU’s extension of obligations to cryptoasset service providers under MiCAR, criminals can still carry out transfers that remain entirely outside regulated platforms, leaving supervisors and law enforcement dependent on blockchain analytics in place of direct reporting. According to Angelini, criminal networks exploit inconsistent regulatory coverage across jurisdictions to move assets with greater freedom.

Stablecoins attracted particular scrutiny in his remarks. Angelini pointed out that major criminal networks use these instruments as a form of digital cash that preserves value throughout lengthy operational cycles, avoiding the volatility of other cryptoassets. He warned that when stablecoins are issued outside the EU’s regulatory perimeter, they undermine the ability of authorities to detect suspicious movement, especially when transactions never interact with European platforms. In such cases, the usual reporting channels fail, making cross-border schemes less visible—particularly when activity originates in jurisdictions with minimal AML standards.

Turning to domestic risks, Angelini reported that Italian criminal organizations have swiftly integrated advanced technological tools into their business models. Drawing on national datasets, he highlighted that a significant share of Italian enterprises showed links to organized crime over the past decade, with criminal groups using digital infrastructures to expand economic influence and blend illegal proceeds into legitimate commerce. As the wider economy relies more heavily on digital payments, the same systems are being leveraged by illicit actors with increasing sophistication.

He also described the rise of crime-as-a-service models, in which specialized providers supply the digital tools needed to commit and launder proceeds from fraud at scale. Combined with synthetic identities, manipulated biometric information, and refined phishing techniques, these services allow criminal groups to breach customer verification controls more effectively. Italian authorities have documented a surge in fraud targeting bank customers, and Angelini emphasized that these initial frauds frequently serve as entry points for subsequent laundering. The digital transformation of illicit markets themselves, such as the notable increase in consumption of psychotropic substances, has further expanded revenue streams requiring integration into the financial system. As transnational criminal groups coordinate across borders, he noted that their financial footprints grow more complex, challenging national authorities whose traditional tools were designed for a less fluid operational environment.

Angelini warned that regulatory discrepancies between jurisdictions continue to produce exploitable weak spots. Even as major economies impose AML obligations on cryptoasset intermediaries, gaps in coverage allow European users to route transactions through platforms based in countries with looser oversight. While banks still apply due diligence at the conversion stage between digital value and fiat currency, he explained that criminals can now operate in digital form long enough to reduce the need for such conversions, limiting exposure to detection. Decentralized finance structures, which operate without identifiable intermediaries, were described as particularly problematic: automated mechanisms replace supervised institutions, eliminating compulsory reporting and leaving authorities without basic governance levers.

He further observed that some stablecoin issuers possess the technical means to freeze or recover assets connected to suspicious activity, but that these capabilities remain inconsistently regulated. Without clear legal definitions of responsibility or enforcement authority, investigators face uncertainty about how to request or utilize these mechanisms. Issuers based outside major regulatory blocs pose the most acute difficulty, he said, because their widely used products escape direct oversight. Although stablecoins remain small relative to traditional monetary aggregates, Angelini cautioned that their growth trajectory has alarmed international bodies. If broad adoption allows criminals to operate entirely within digital domains, bypassing conventional payment systems, core AML tools could lose effectiveness and visibility into illicit flows would deteriorate further. Global standard-setting efforts aim to address these concerns, but he acknowledged that significant legal and operational gaps remain.

Concluding his intervention, Angelini underscored that technological progress has simultaneously strengthened criminal capabilities and enhanced the tools available to authorities. The Bank of Italy and its financial intelligence unit maintain extensive datasets that support sophisticated modelling of criminal behavior, enabling the mapping of infiltration patterns and identification of systemic vulnerabilities across the economy. By blending quantitative analysis with granular information, supervisory bodies can now uncover complex schemes that once evaded detection. He emphasized that the strength of national AML systems hinges on cooperation among supervisors, investigative agencies, judicial institutions, financial intermediaries, and academic researchers. Because criminal organizations operate across borders, he argued, AML strategies must rely on coordinated information-sharing and joint responses. The workshop itself, he noted, demonstrated that such collaboration remains indispensable to preserving the integrity of the financial system as digital innovation accelerates.

By fLEXI tEAM