The ICIJ Coin Laundry investigation has intensified global attention on the uneven governance of digital assets and provides essential context for understanding how fragmented regulation shapes money-laundering exposure worldwide. Countries across regions adopt widely different rules, ranging from prohibitions to permissive environments, creating an asymmetrical landscape where illicit finance moves more quickly than supervisory reforms. The Coin Laundry, a major cross-border project led by dozens of investigative journalists, documented how criminals leveraged exchanges, peer-to-peer markets, and unlicensed intermediaries to move illicit value across borders. Its findings serve as an illustration of the vulnerabilities present in the red-light, yellow-light, green-light, and roadwork categories (keeping ICIJ terms) examined below.

Global Divergence Through The Coin Laundry Lens

The Coin Laundry demonstrated how crypto-related AML threats vary depending on each jurisdiction’s regulatory posture. Countries with stringent restrictions include China and Algeria, both attempting to suppress most or all crypto activity. Frameworks with structured oversight include the European Union and Japan, where licensing, monitoring, and compliance obligations shape the market. Innovation-driven or permissive environments include El Salvador and the United Arab Emirates. Transitional or in-progress environments include India and Nigeria, covering jurisdictions where laws evolve or enforcement remains inconsistent.

Performance levels differ within each category. Some jurisdictions have strong laws but limited supervisory capacity, others promote innovation first and compliance second, and some maintain prohibitions that unintentionally fuel underground networks. The Coin Laundry demonstrated that criminals rarely rely on a single jurisdiction but instead move between environments that present the least resistance.

Red Light Restrictions and Their AML Impact

Red-light jurisdictions use prohibitions or near-prohibitions to manage risks related to financial stability or illicit finance. China and Algeria exemplify these frameworks, though the operational realities differ.

China’s regulatory framework features a sweeping ban introduced in 2021. Authorities declared all crypto activities illegal, including trading, mining, and exchange services. Banks are prohibited from facilitating digital-asset transactions, exchanges are blocked, and online promotion is removed through coordinated enforcement.
On the ground, underground markets persist despite the formal prohibitions. Users rely on peer-to-peer brokers, encrypted messaging channels and offshore exchanges accessed through circumvention tools. Criminal networks exploit these informal pathways to move funds outside the regulated perimeter, often routing assets offshore before re-entering the formal system through unregulated cash-out channels. Enforcement actions occur, yet the persistence of informal trade demonstrates the limitations of outright bans.

Algeria’s framework is defined by Law No. 25-10, introduced in 2025, which criminalizes mining, custody, trading, issuance and advertising of crypto assets. Sanctions include fines and imprisonment, with enhanced penalties for laundering or terrorism-financing links. The law strengthened an earlier 2018 ban.
The operational reality shows that prohibitions reduce formal market activity but do not eliminate digital-asset use. Informal brokers and cross-border intermediaries continue to service local users through chat applications and foreign platforms. These channels enable illicit funds to move beyond domestic monitoring, and regulators have limited visibility over transactions occurring in offshore environments. The combination of prohibition and demand has produced a shadow system that criminals can exploit.

Additional red-light jurisdictions widely recognized include Morocco, Nepal, Bangladesh, Iraq, and Qatar. Each cites fraud, illicit flows, currency stability or consumer risks as grounds for restrictions.

AML patterns commonly observed in red-light environments include:
• peer-to-peer brokers functioning without supervision
• underground markets that bypass institutions entirely
• cash-to-crypto operations operating outside the banking system
• cross-border transfers routed through offshore exchanges
• limited suspicious-activity reporting due to the absence of licensed providers

Strict bans may limit regulated markets but often expand illicit channels, increasing opacity rather than reducing risk.

Yellow Light Supervision and Structured Oversight

Yellow-light jurisdictions permit crypto activity but condition it on licensing, surveillance and defined AML controls. The European Union and Japan represent two prominent frameworks that approach digital assets through structured regulatory systems.

The EU’s regulatory framework centers on the Markets in Crypto-Assets Regulation (MiCA), fully implemented in 2024. MiCA imposes licensing, reserve requirements for stablecoins, white-paper disclosures for token issuers, governance expectations, and sustainability reporting. It also prevents foreign service providers from targeting EU users without compliance.
In real-world conditions, regulators have begun reviewing license applications, conducting inspection,s and issuing technical standards. Firms face substantial operational requirements, particularly smaller providers. Stablecoin issuers must demonstrate robust reserve management and risk controls. Suspicious-activity reporting has increased as firms adapt to new supervisory expectations and integrate MiCA into their compliance frameworks.

Japan’s regulatory framework relies on the Payment Services Act and the Financial Instruments and Exchange Act. Crypto exchanges must register, conduct identity verification, segregate customer assets, maintain cybersecurity standards and file suspicious-transaction reports. Stablecoin issuance is limited to licensed banks, trust companies and specific payment providers.Day-to-day operations show a mature supervisory environment. Regulators routinely inspect exchanges and have ordered companies to upgrade systems or halt services when deficiencies are discovered. Taxation remains a practical challenge because high progressive income taxes discourage some investors from declaring gains. Despite that, Japan maintains steady oversight and requires strong monitoring systems to retain registration.

Other yellow-light jurisdictions often referenced include Singapore, South Korea, Australia, Canada, and the United Kingdom. These jurisdictions combine licensing with thematic inspections and ongoing reporting obligations.

AML patterns observed in yellow-light environments include:
• high reporting volumes tied to layering and chain-hopping
• regulatory focus on risk assessments and governance structures
• supervisory actions for weak internal controls
• increased use of blockchain analytics tools by institutions
• rising compliance costs shaping market participation

Yellow-light jurisdictions typically provide stronger guardrails but still receive illicit flows originating from weaker upstream environments.

Green Light Embrace and Innovation-Driven Frameworks

Green-light jurisdictions encourage digital-asset growth and position themselves as innovation hubs. These environments balance market development with compliance requirements that vary in strength. El Salvador and the United Arab Emirates represent two contrasting models within this category.

El Salvador’s legal framework began in 2021 when bitcoin was granted legal-tender status alongside the U.S. dollar. The national wallet program offered incentives, and businesses were initially required to accept bitcoin, though this requirement was later rolled back. The government continues to champion pro-bitcoin policies and proposes digital-asset-based economic zones.
In real-world conditions, everyday bitcoin use remains limited. Many citizens and businesses prefer dollars. Technical challenges affected initial wallet performance, reducing adoption. However, investment projects continue, including mining operations and tourism initiatives. Compliance development remains ongoing, and the pace of regulatory refinement does not always match the country’s innovation ambitions.

The UAE’s framework integrates federal regulators, emirate-level authorities and specialized free zones. Dubai’s Virtual Assets Regulatory Authority and Abu Dhabi’s Financial Services Regulatory Authority oversee licensing and governance. Free zones such as the RAK Digital Assets Oasis offer permissive taxation and startup-friendly environments.
Operational dynamics show a rapidly expanding market. Authorities issue guidance on suspicious-transaction reporting, marketing standards, unlicensed providers and sanctions compliance. Surveillance capacity has strengthened in recent years. The country continues attracting exchanges, custodians and fintech developers seeking regional access.

Other green-light jurisdictions commonly noted include Malta, Switzerland, Bahrain and Bermuda, each encouraging innovation through tailored licensing or specialized zones.

AML realities in green-light settings include:
• rapid expansion of OTC brokers and custodial platforms
• intermediaries using linked corporate structures across multiple jurisdictions
• cross-border layering of funds from transitional markets
• dependence on internal controls rather than government enforcement
• elevated transaction complexity driven by high market activity

While green-light jurisdictions advance innovation, they can unintentionally attract laundering flows seeking regulatory arbitrage.

Roadwork Environments and Transitional Risks

Roadwork jurisdictions are in phases of legislative transition or regulatory reform. Their frameworks are either incomplete, undergoing revision or inconsistently enforced. India and Nigeria offer indicative examples.

India’s framework requires crypto companies to register with the Financial Intelligence Unit and maintain AML controls. A comprehensive digital-asset law has been proposed but not enacted. Taxation rules impose a 30 percent rate on gains and define specific withholding obligations.
The situation on the ground demonstrates rapid growth in user adoption but uneven enforcement. Some exchanges face operational burdens from tax rules. Others have relocated to foreign jurisdictions. Reporting requirements remain active, but inconsistent interpretations of guidance affect compliance quality. Infrastructure limitations occasionally hinder surveillance.

Nigeria’s framework has evolved significantly. After restricting bank involvement in 2021, authorities relaxed rules in 2023, permitting banks to serve licensed crypto businesses. In 2025, the Investments and Securities Act classified digital assets as securities under the national regulatory authority.
Realities include high adoption driven by inflation, currency pressures and limited banking reach. Enforcement varies by region, and unlicensed providers remain active. Awareness of the national digital currency remains modest. Transitional conditions create loopholes that illicit actors use to move funds through lightly supervised pathways.

Other roadwork jurisdictions mentioned in mainstream sources include Turkey, Kenya, Brazil, and the Philippines, where legislation is either debated, partially implemented, or not yet enforced consistently.

AML themes in transitional jurisdictions include:
• timing gaps between proposed and implemented rules
• unclear responsibilities for reporting obligations
• insufficient supervisory resources
• regulatory uncertainty exploited to move funds across borders
• inconsistent licensing thresholds

These environments combine high adoption with uncertain oversight, creating some of the highest-risk conditions globally.

How Global Gaps Shape Laundering Threats

The Coin Laundry revealed that criminal networks exploit the entire global regulatory spectrum. Transactions frequently begin in transitional markets, move through permissive hubs, pass temporarily through regulated platforms and exit through restrictive jurisdictions where monitoring is difficult. This multi-stage layering enables illicit actors to bypass institutional reporting systems.

For AML practitioners, this necessitates:
• global mapping of jurisdictional risk profiles
• enhanced due diligence for partners tied to green-light or roadwork countries
• behavioural analytics detecting cross-border layering
• blockchain-analysis tools identifying patterns linked to jurisdictional arbitrage
• coordination with foreign regulators and financial intelligence bodies
• integration of multi-jurisdiction indicators into monitoring systems

The Coin Laundry illustrated that even well-regulated exchanges may handle illicit flows if upstream vulnerabilities remain unresolved. AML programs must extend beyond domestic obligations and address global interdependencies.

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Related Links

• Financial Action Task Force Standards
• EU Markets in Crypto-Assets Regulation
• Japan FSA Digital-Asset Guidance
• UAE Virtual Assets Regulatory Resources
• India Draft Digital-Asset Legislation

Other FinCrime Central Articles About Evolving National Crypto Regulations

• Summer Series #2. Crypto Under Fire: Enforcement, Risks & Regulations
• Stricter South Korea Crypto Regulations to Safeguard KRW 108 Trillion Market
• Digital Asset Regulation: Ghana’s September Milestone
• Proposed UK Crypto Regulation Sparks Optimism
• Italy Enforces EU Crypto Regulation to Tackle Illicit Transactions in 2025
• Australia Enforces Tougher AML Regulations for Crypto ATM Operators
• Cryptocurrency Regulation in France: Key Insights for Investors in 2025
• ESMA Clarifies Stablecoin Custody and Transfer Rules under MiCA Regulation
• US GENIUS Act Drives US Stablecoin Crackdown to Combat Money Laundering

Source: ICIJ Global Guide to Crypto Regulation, by Brenda Medina
Credits (as listed by ICIJ): This analysis is based, in part, on the Atlantic Council’s global regulatory tracker and crypto adoption ranking, Financial Action Task Force (FATF)’s lists and reports, and Chainalysis reports and rankings. ICIJ interviewed Claudia M. Hernández, an attorney and digital assets analyst in El Salvador; Aleks Ring, a forensic accountant at Aegis Resolve and volunteer at Operation Shamrock; Omri Marian, a professor at the University of California, Irvine School of Law; Alisha Chhangani, an assistant director at the Atlantic Council’s GeoEconomics Center, and Katherine Wilkin, a policy and advocacy coordinator at Transparency International in Berlin.Contributors: Hamish Boland-Rudder, Sam Ellefson, Joanna Robin, Annys Shin, Rick Sia, Dean Starkman, Spencer Woodman and Angie Wu.

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