Asher Draycott Mar
21

FATF Blacklist: How Iran, North Korea, and Myanmar Are Using Crypto to Bypass Sanctions

When the Financial Action Task Force (FATF) updates its global blacklist, the world’s financial systems take notice. As of June 2025, only three countries remain on the highest-risk list: Iran, North Korea, and Myanmar. These aren’t just political outcasts-they’re the epicenters of the world’s most dangerous cryptocurrency crime networks. And while governments scramble to contain the damage, everyday people in these nations are turning to crypto not out of rebellion, but survival.

Why These Three Countries Are Still on the FATF Blacklist

The FATF doesn’t put countries on its blacklist lightly. It’s reserved for nations that refuse to fix serious gaps in their anti-money laundering (AML) and counter-terrorism financing (CFT) systems. Iran, North Korea, and Myanmar have been on this list for years-not because they’re uniquely corrupt, but because they’ve repeatedly ignored international demands to tighten controls.

Iran has been under renewed scrutiny since February 2020, after FATF found its financial institutions still enabling anonymous cross-border transfers without proper oversight. North Korea’s regime has gone further: it doesn’t even pretend to comply. Instead, it runs state-sponsored hacking teams that target crypto exchanges like it’s a war economy. Myanmar, following its 2021 military coup, saw its financial system collapse into chaos. While FATF hasn’t imposed full countermeasures against Myanmar yet, it demands enhanced due diligence from banks dealing with any entity linked to the country.

What ties them together? A shared lack of trust in their own banking systems-and a growing reliance on crypto as a workaround.

North Korea’s $1.5 Billion Crypto Heist and Why It Matters

In February 2025, North Korean hackers stole $1.5 billion from ByBit, one of the world’s largest cryptocurrency exchanges. That single theft was larger than the GDP of 60 countries. It wasn’t an accident. It was a calculated operation, likely funded and directed by the regime’s Reconnaissance General Bureau.

Chainalysis data shows that in 2024, sanctioned jurisdictions like North Korea received over $15.8 billion in cryptocurrency. That’s nearly 40% of all illicit crypto flows globally. And it’s not just theft. North Korea uses crypto to buy weapons, fund its nuclear program, and pay its hackers. They don’t use traditional banks-they use mixers, privacy coins like Monero, and decentralized exchanges that don’t ask questions.

The U.S. Treasury’s Office of Foreign Assets Control (OFAC) responded by designating 13 crypto addresses in 2024 alone-the second-highest number in seven years. But tracking these funds is like chasing smoke. Once crypto leaves a sanctioned exchange, it can be split across hundreds of wallets, layered through decentralized bridges, and cashed out in places with weak enforcement.

Iran’s Crypto Surge: A Nation on the Edge

Iran’s situation is different. The people aren’t stealing crypto-they’re using it to survive.

With U.S. sanctions freezing its access to global banking, Iranian citizens turned to Bitcoin and Ethereum in droves. In 2024, Iranian centralized exchanges saw a 300% spike in transaction outflows. People weren’t trading for profit. They were moving money out-buying crypto to send to family abroad, or holding it as a hedge against hyperinflation. Bitcoin’s decentralized nature lets them bypass state-controlled banks, avoid currency controls, and keep their wealth under their own control.

But this surge has drawn sharp criticism. FATF says Iran’s exchanges lack proper KYC (know your customer) checks. That means bad actors can easily use Iranian platforms to launder stolen funds. The government’s own crackdown on crypto mining in 2023 didn’t stop the trend-it just pushed it underground. Now, private mining rigs operate in basements, and peer-to-peer trades happen over Telegram.

What’s happening in Iran shows a deeper truth: crypto isn’t just a tool for criminals. For ordinary people under sanctions, it’s the only financial lifeline left.

A silent train crosses a snowy border with glowing crypto coins floating like fireflies inside its windows.

Myanmar’s Shadow Economy and the Rise of Crypto Smuggling

Myanmar’s military junta has been isolated since the 2021 coup. International banks cut ties. Aid organizations pulled out. And in the vacuum, crypto filled the gap.

Unlike North Korea, Myanmar’s crypto use isn’t state-run. It’s grassroots. Ethnic armed groups, border traders, and even displaced communities use crypto to pay for food, medicine, and weapons. The Kachin Independence Army reportedly uses USDT to buy arms from neighboring countries. Cross-border trade between Myanmar and Thailand, China, and India now often happens via crypto-no banks, no paperwork, no oversight.

FATF calls this a risk. And it is. But it’s also a symptom. When a government collapses, people don’t wait for permission to survive. Crypto became the new cash.

The Global System Is Failing to Keep Up

Here’s the uncomfortable truth: most countries aren’t ready for crypto sanctions.

As of April 2024, 75% of FATF member countries were either noncompliant or only partially compliant with global standards for regulating virtual asset service providers. That means most banks, exchanges, and payment processors around the world don’t have the tools-or the legal authority-to stop crypto flows from sanctioned countries.

Even major players like the U.S. are struggling. FinCEN, the nation’s financial intelligence unit, has proposed designating crypto mixers like the Huione Group as primary money laundering concerns. But enforcement is patchy. Some exchanges block Iranian IPs. Others don’t. Some wallets freeze funds tied to North Korean addresses. Others don’t even check.

And then there’s the rise of privacy coins and decentralized finance (DeFi). Platforms like Tornado Cash and stealth swaps let users break transaction trails with a single click. These aren’t illegal everywhere. But they’re impossible to trace-and that’s exactly why sanctioned actors love them.

A Myanmar farmer trades rice for USDT as digital tokens turn into birds flying toward the horizon.

What’s Next? More Sanctions-or More Realism?

FATF’s response has been predictable: more warnings, more pressure, more calls for global coordination. But the data doesn’t lie. Sanctions alone aren’t working. Crypto flows to sanctioned states have grown by 200% since 2020.

Some experts argue that instead of trying to block crypto, governments should focus on tracking it. Blockchain analysis firms like Chainalysis and Elliptic have shown that even anonymous transactions leave footprints. The real challenge isn’t technology-it’s political will. Do governments want to stop crime? Or do they just want to look like they’re doing something?

Meanwhile, in Tehran, Pyongyang, and Yangon, people keep using crypto-not because they support regimes, but because they have no other choice. Bitcoin doesn’t care about borders. It doesn’t ask for a passport. It only asks for a private key.

The Bigger Picture: Crypto as a Tool of Survival

It’s easy to paint crypto users in sanctioned countries as criminals. But that ignores the human reality. In Iran, a mother uses crypto to send money to her daughter studying abroad. In Myanmar, a farmer sells rice for USDT so he can buy medicine for his sick child. In North Korea, a defector uses a seed phrase to escape with everything they own.

Crypto isn’t the problem. The problem is a global financial system that leaves millions behind-and then blames them for finding their own way out.

Asher Draycott

I'm a blockchain analyst and markets researcher who bridges crypto and equities. I advise startups and funds on token economics, exchange listings, and portfolio strategy, and I publish deep dives on coins, exchanges, and airdrop strategies. My goal is to translate complex on-chain signals into actionable insights for traders and long-term investors.