Here is a concise summary of the key points:

The crypto sector’s dynamism is rapidly transforming the financial landscape; however, this also makes it a prime target to ML/TF risks. Key channels of exposure include:

• Exploitation of regulatory gaps by crypto firms, often engaged in "forum shopping" or misuse of exemptions like reverse solicitation.
• Weak governance, opaque beneficial ownership structures and inadequate AML/CFT measures.
• High-risk exposure through Decentralised Finance (DeFi) platforms, which were often identified as entry and exit points for illicit funds.

The report welcomes the introduction of further safeguards through the EU's Markets in Crypto-Assets Regulation (MiCA) and amendments to the EU Anti-Money Laundering Directives (AMLD), including:

• Unified authorisation and passporting regime accompanied by transparency requirements, and stronger governance standards.
• The empowerment of competent authorities to enforce compliance, monitor unauthorised activities and ensure effective implementation of these frameworks.
• Public registers for authorised crypto-asset service providers (CASPs) and consumer outreach campaigns aim to improve transparency and protect users from unauthorised operators.

However, the report stresses the need for effective implementation of the regimes by the national competent authorities of EU Member States and issues a number of supervisory recommendations, including:

• Upholding cross-border cooperation and information-sharing among authorities to close regulatory gaps.
• Monitoring linked entities and ensure transparency in ownership structures to prevent misuse of complex arrangements.
• Addressing legacy compliance issues before granting authorisations under MiCA.
• Leveraging advanced tools like blockchain forensics, supervisory technology (SupTech) solutions and public-private dialogue to stay ahead of emerging risks.
• Ensuring effective implementation of the Central Contact Point (CCP) mechanism to enhance oversight of cross-border entities.
• Adopt innovative tools and techniques such as surveys on market exposure to specific CASPs raising ML/TF concerns.

The report concludes that supervisors must remain agile and informed about evolving risks, including those linked to new technologies, products and geopolitical developments. Continuous training, risk assessments and collaboration with private sector stakeholders are critical to addressing these challenges.

EBA’s press release can be found here and the report here.