How Arab Countries Regulate Cryptocurrencies to Combat Money Laundering

I have been studying the regulatory approach to digital assets across several African countries and found a pattern I initially thought was peculiar to Nigeria namely, the government’s reaction to the emergence of digital assets as a new asset class, particularly cryptocurrencies. Across jurisdictions, a broadly consistent sequence can be observed: an initial reflex of caution or restriction, followed by gradual engagement and selective regulation. While not every country follows this trajectory in a rigid or uniform way, the general progression remains strikingly similar. Below is a synthesis of that pattern. 1. Reflexive caution and public warnings At first, central banks and financial regulators react with public advisories and warnings. Authorities emphasise volatility, consumer-protection risks, and potential criminal uses (money-laundering, terrorism financing), and they urge citizens to avoid speculative exposure. This is an immediate risk-management posture: visible, low-cost, and politically defensible. 2. Defensive operational measures Next, regulators adopt operational controls aimed at limiting the domestic plumbing for crypto activity: banking restrictions, refusals to offer correspondent services to VASPs, or directives preventing regulated institutions from handling crypto transactions. These measures seek to contain perceived threats to monetary stability and capital controls. 3. Outright bans (in some cases) A minority of states move from warnings to prohibition criminalising exchange activity or denying service provision. These bans are typically driven by acute concerns about currency sovereignty, weak AML/CFT capacity, or the absence of a policy framework to manage spillovers. 4. Fragmentation and inter-agency divergence Where the policy ecosystem involves multiple authorities (central bank, securities commission, tax authority), responses tend to diverge: one agency may favour prohibition or strict control while another pushes for market supervision or sandboxing. The result is regulatory fragmentation and legal uncertainty. 5. Reassessment and selective engagement As adoption deepens and use-cases (remittances, stablecoins for cross-border payments, merchant acceptance) become visible, authorities begin to reassess. This takes the form of consultations, regulatory sandboxes, targeted licensing of VASPs, or activity-based rules rather than asset bans. 6. Formalisation into law and targeted supervision Ultimately, some jurisdictions move toward formalising digital asset activity within legal and supervisory frameworks. This may involve creating token taxonomies, developing licensing regimes for intermediaries, adopting AML/CFT standards aligned with FATF’s Travel Rule, and, in some cases, exploring or launching central bank digital currencies (CBDCs). The initial defensive stance gradually transitions into a calibrated model of oversight aimed at enabling innovation while controlling risk.

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No. 2️⃣2️⃣ - Virtual Asset Snapshot: Saudi Arabia - What are the regulatory developments, current landscape and key money laundering vulnerabilities related to virtual assets and VASPs? ⚖️ 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗙𝗿𝗮𝗺𝗲𝘄𝗼𝗿𝗸 Saudi Arabia maintains one of the Gulf’s most restrictive environments for virtual assets. The Saudi Central Bank (SAMA) and Ministry of Finance have warned repeatedly that cryptocurrencies operate outside the Kingdom’s supervision. FATF’s 2025 update classifies Saudi Arabia as a jurisdiction that prohibits the use of virtual assets and VASPs in practice. No exchange or service provider is licensed domestically, and crypto is not recognised as legal tender. 🏛️ R𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗢𝘃𝗲𝗿𝘀𝗶𝗴𝗵𝘁 Oversight lies primarily with SAMA and the Capital Market Authority (CMA), supported by the Financial Intelligence Unit and the Anti-Money-Laundering Permanent Committee (AMLPC). Saudi Arabia has conducted a national risk assessment covering VAs and VASPs (per FATF), but its findings have not been made public, reflecting a cautious but opaque stance. 🪪 𝗟𝗶𝗰𝗲𝗻𝘀𝗶𝗻𝗴 & 𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 Because Saudi’s approach is prohibitionist, no VASP licences exist. The FATF notes licensing and inspection obligations are not applicable. While the #TravelRule gained global traction in 2024–25, there is no public evidence of Saudi enforcement. Similarly, Saudi is not listed among OECD jurisdictions committed to the Crypto-Asset Reporting Framework (CARF) for 2027 exchanges. 💸 𝗠𝗟/𝗧𝗙 𝗥𝗶𝘀𝗸𝘀 The absence of licensed VASPs makes detection and supervision of crypto activity difficult. Cross-border transfers via foreign platforms and P2P networks are largely outside domestic monitoring, heightening exposure to money laundering, terrorist financing and sanctions evasion. The #FATF highlights these gaps as major vulnerabilities for prohibitionist jurisdictions. 🧾 𝗧𝗮𝘅𝗮𝘁𝗶𝗼𝗻 & 𝗧𝗿𝗮𝗻𝘀𝗽𝗮𝗿𝗲𝗻𝗰𝘆 Crypto’s tax treatment remains unclear. There is no explicit framework for taxing capital gains, mining or airdrops. While income from crypto may theoretically fall under general tax provisions, public guidance is limited, and Saudi has not yet committed to CARF transparency standards. 🔍 𝗞𝗲𝘆 𝗩𝘂𝗹𝗻𝗲𝗿𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀 1️⃣ Offshore exchanges and informal P2P markets bypass KYC and AML controls. 2️⃣ Weak cross-border information sharing limits detection of illicit flows. 3️⃣ No public NRA findings leave businesses without clear risk indicators. 4️⃣ Ambiguity around reporting and taxation creates compliance uncertainty. 🚀 𝗙𝘂𝘁𝘂𝗿𝗲 𝗢𝘂𝘁𝗹𝗼𝗼𝗸 Saudi Arabia’s Vision 2030 aims to balance innovation and financial integrity. The Kingdom continues to explore blockchain and fintech but maintains a ban on crypto trading. Gradual evolution is expected only after greater FATF and OECD alignment. Access full reporting and scoring on all 245 jurisdictions via subscription. 👉 sales@knowyourcountry...

RegTech 2: 👉 European Banking Authority report : Tackling Money Laundering and Terrorist Financing 👉 UK tokenization effort 👉 Luxembourg and Sweden Bitcoin support 👉A16Z Crypto -5 actions states can take to advance responsible crypto innovation 👇 👉UK to appoint ‘digital markets champion’ to lead tokenization efforts: report ....the new role is set to coordinate and lead collaboration between the government and private sector on tokenization. https://lnkd.in/eTGX6YqE     👉Luxembourg’s 𝗜𝗻𝘁𝗲𝗿𝗴𝗲𝗻𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗦𝗼𝘃𝗲𝗿𝗲𝗶𝗴𝗻 𝗪𝗲𝗮𝗹𝘁𝗵 𝗙𝘂𝗻𝗱 (𝗙𝗦𝗜𝗟) just allocated 𝟭% 𝗼𝗳 𝗶𝘁𝘀 $𝟳𝟯𝟬𝗠 𝗽𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 to Bitcoin ETFs. https://lnkd.in/eREdv47F 👉Sweden’s Bold Push for Bitcoin Freedom Let’s uncover Sweden’s bold move to remove Bitcoin capital gains tax and how it could reshape crypto payments across Europe. https://lnkd.in/ejVARPza 👉A16Z Crypto: State crypto policy playbook - 5 actions states can take to advance responsible crypto innovation https://lnkd.in/eQbFrZZr 👉European Banking Authority Report: Tackling Money Laundering (ML) and Terrorist Financing (TF) This report summarises the lessons learned from actions taken by AML/CFT competent authorities (CAs) and the European Banking Authority (EBA) regarding the identification and management of ML/TF risks associated with crypto-asset businesses, both before and immediately after the implementation of the new regulatory framework. The report also highlights the safeguards introduced by MiCA and the AML/CFT regime to address ML/TF risks and identifies measures to ensure their effective application. https://lnkd.in/eYwd_93q 👉SEC plan for blockchain-based stocks pits Coinbase and Robinhood against Wall Street giants https://lnkd.in/eMz7KxwJ   👉An Open Letter to European Central Bankers: A Stable Opportunity Europe has earned the world’s trust due to its regulatory maturity. Europe should collaborate with the private sector to develop EU stablecoin infrastructure.  Unfortunately, EU central bankers (like their Chinese counterparts) have been obsessed with issuing a central bank digital currency (CBDC). By being state controlled, CBDCs become a tool for surveillance and control. China's digital yuan, e-CNY, establishes this precedent. At any time the PRC can surveil and turn-off a user's money. On the other hand, stablecoins protect the public’s privacy. If the government wants to access an individual’s funds, they have to obtain a judge’s warrant. This follows the precedent of issuing writs to credit card companies to access customer transactions. Additionally, CBDCs, by being a government monopoly, present catastrophic risk. What happens if it gets hacked, or if there is a bug? In the world of stablecoins, there have been numerous glitches. But users diversified to other stables. The choice before Europe is clear, expand monetary influence through regulated stablecoins, or risk becoming a financial fossil. https://lnkd.in/eVuUe76F

French authorities have expanded AML checks across more than 100 registered crypto providers to inform MiCA (Markets in Crypto-Assets Regulation) licensing decisions. Inspections include major exchanges such as Binance and Coinhouse.  https://lnkd.in/dXQTzAPm

Global Crypto Regulatory Updates – A Week of Strong Actions and Reforms The past week has seen significant developments in crypto regulation and enforcement across multiple jurisdictions. Each event reinforces one message: oversight in the digital asset space is becoming sharper and more coordinated globally. Germany (BaFin Warning) BaFin has issued a warning against fraudulent trading platforms and investment apps promoted through WhatsApp groups and websites such as ki-zep.com and h5.beststreaming.vip. These platforms were found to be offering trading and crypto investment services without regulatory authorisation, often pretending to be linked to licensed financial institutions. Investors were lured through social media and chat groups and later faced withdrawal issues. BaFin cautions users to verify the legitimacy of any financial service provider before investing — scams are increasingly shifting to personal messaging platforms. United Kingdom (Crypto Fraud Case) UK authorities have sentenced Chinese national Qian Zhimin to more than 11 years in prison for orchestrating a $6 billion Bitcoin fraud — one of Europe’s largest crypto-related criminal cases. The investigation uncovered over 61,000 Bitcoins linked to a fraudulent investment network operating across China and the UK. The case highlights how cryptocurrencies continue to be used for laundering illicit funds, but also how enforcement capabilities in tracing such assets have significantly advanced. Bank of England (Stablecoin Regulation Framework) The Bank of England has released a consultation paper outlining how it plans to regulate sterling-denominated stablecoins. The proposed framework introduces a two-tier system: the Financial Conduct Authority (FCA) would supervise non-systemic stablecoins, while the Bank of England would oversee those considered “systemic” — meaning they could impact financial stability. The goal is to ensure adequate reserves, operational resilience, and transparency. This marks a major step toward integrating digital currencies into the UK’s regulated payment ecosystem. Ireland (Coinbase Fine) The Central Bank of Ireland has fined Coinbase Europe €21.5 million for serious failures in its transaction monitoring systems. Between 2021 and 2025, technical issues caused around 30 million transactions — some tied to high-risk activities such as drug dealing and child exploitation — to bypass AML screening. The lapse resulted from coding errors in Coinbase’s monitoring system and required years of remediation and retrospective reviews. The fine serves as a strong signal that crypto firms will be held to the same AML standards as traditional financial institution

🌍 Crypto Compliance Weekly | October 20- 24, 2025 Last week, regulators around the world delivered a clear message: crypto is no longer outside the bounds of global financial compliance. Oversight is expanding, enforcement is accelerating, and expectations are converging. In the United States, the Treasury’s #OFAC and #FinCEN imposed $53.5 million in penalties on Bittrex for sanctions and AML violations, the largest virtual-currency enforcement action to date. The move underscores that crypto exchanges must now meet bank-grade sanctions screening and reporting standards. Canada followed suit. #FINTRAC hit Xeltox Enterprises with a record C$176.9 million AML fine for failing to report suspicious virtual-currency transactions. It’s the strongest signal yet that Canadian regulators expect proactive AML governance, not box-ticking. Across Europe, #ESMA advanced plans to centralize crypto supervision under MiCA, creating a single EU-wide licensing regime. This shift will simplify compliance but tighten scrutiny around disclosures and consumer protection. In the United Kingdom, the #FCA lifted its four-year ban on crypto ETNs for retail investors, marking growing market maturity. Yet, the regulator made clear that under the Consumer Duty, firms must prove they can manage retail risks responsibly. Meanwhile in Asia, enforcement is catching up with innovation. South Korea’s tax authority gained legal powers to seize crypto from cold wallets, expanding compliance reach beyond exchanges. Kazakhstan shuttered 130 unlicensed platforms, confiscating $17 million in assets and imposing tougher ID verification rules. The United Arab Emirates also intensified oversight. Dubai’s #VARA fined 19 unlicensed firms, while the #DFSA advanced proposals on custody, disclosures, and market-abuse prevention for the #DIFC, all pointing toward stricter licensing and operational resilience. Singapore’s #MAS launched a consultation to strengthen investor recourse in market misconduct cases, including tokenised securities. Australia’s #AUSTRAC flagged rising crypto-enabled crime across the Pacific and called for higher Suspicious Matter Reporting quality. Across all these developments, one message is consistent: compliance is no longer a defensive function; it’s a strategic differentiator. Regulators are aligning faster than ever, and the firms that treat governance, monitoring, and disclosure as core business practices will be the ones still standing. 📩 Read the full details, “What This Means” and “Implications for Compliance Teams,” in this week’s edition of Crypto Compliance Weekly. 👉 Access here: https://lnkd.in/dHTYVaGE

Digital Currency Under Fire: Cryptocurrencies Linked to Rising Money Laundering Concerns Introduction The rapidly evolving world of digital currency is capturing global attention. However, along with its immense potential comes a darker side—mounting concerns regarding cryptocurrencies’ role in money laundering. Recent reports highlight alarming connections between digital currencies and illicit financial activities, prompting regulators to take a closer look at this groundbreaking technology. The Rise of […] Read more https://lnkd.in/diPfQtGf Compliance Edge, CAAS for High Risk #FintechCompliance #RegTech #BankingCompliance #AML #KYC #TransactionMonitoring #PaymentCompliance #SEPACompliance #PSD2Compliance #FintechRegulation #ComplianceTech #FinancialCrimePrevention #RegulatoryReporting #eMoneyCompliance #FintechLicensing #BaaSCompliance #RiskManagement #FraudPrevention #BankingRegulation #ComplianceSolutions #DataPrivacy #GDPR #CrossBorderCompliance #Fincrime #SecurePayments