Luxembourg’s 2025 National Risk Assessment Flags Crypto as High-Risk for Money Laundering
Luxembourg’s 2025 National Risk Assessment (NRA) has designated virtual asset service providers (VASPs) as high-risk entities for money laundering, highlighting significant concerns about the cryptocurrency industry’s vulnerability to financial crime. The report explicitly labels the inherent risk level of VASPs as “High,” citing factors such as substantial transaction volumes, extensive client reach, diverse distribution channels, varied legal structures, and the inherently international nature of their operations.
This classification builds upon previous assessments. The 2020 NRA initially identified VASPs as an emerging risk following a comprehensive evaluation of money laundering risks associated with virtual assets. The 2022 NRA further escalated the risk level to “very high,” emphasizing the cross-border and internet-based characteristics of cryptocurrencies.
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EU Crypto Regulation: A Shifting Landscape
The European Union (EU), including Luxembourg as a founding member, is actively working to regulate the cryptocurrency sector. The Markets in Crypto-Assets (MiCA) framework is a central part of this effort, aiming to harmonize crypto regulations across all 27 member states. Since January, crypto asset service providers have been obtaining licenses for legal EU operation. Examples include Kraken launching regulated derivatives trading and Crypto.com securing a similar license.
MiCA also introduces new requirements for stablecoins. Notably, Tether, the issuer of USDT, has refused to comply with these new rules, resulting in delisting from major exchanges like Crypto.com, Coinbase, and Binance within the EU.
Related: French prosecutors probe Binance over money laundering, fraud allegations: Report
The Growing Use of Crypto in Money Laundering
The increasing integration of cryptocurrencies into the global financial system has unfortunately led to their greater use in money laundering schemes. Recent events highlight this trend. Hong Kong police recently arrested 12 individuals involved in a cross-border crypto money laundering operation, using over 500 bank accounts to launder $15 million. Additionally, European law enforcement arrested 17 suspects of a “mafia crypto bank” for allegedly laundering over €23.5 million for criminal entities in the Middle East and China.
Related: Crypto and money laundering: What you need to know
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