FATF Issues Comprehensive Guidance on Virtual Asset Recovery: What Law Enforcement Needs to Know

The Financial Action Task Force (FATF) just lately launched new steerage on asset restoration that considerably advances how authorities worldwide ought to method the restoration of criminal assets. The steerage gives an in depth roadmap masking every part from growing coverage frameworks and conducting investigations to executing seizures and confiscations, and in the end returning, repatriating, and utilizing recovered belongings. The Asset Recovery Guidance and Best Practices, issued in November 2025, comes at a crucial time — FATF assessments present that greater than 80% of jurisdictions are working at low or reasonable ranges of effectiveness in asset restoration.

While the steerage covers all asset sorts all through the whole seizure lifecycle, it pays particular consideration to digital belongings (VAs), reflecting their rising function in each conventional finance (TradFi) and illicit activity. FATF is asking on jurisdictions to make asset restoration a coverage and operational precedence, utilizing this new steerage to safeguard the integrity of the worldwide monetary system and enhance outcomes for victims and communities. While digital belongings require specialised approaches, FATF notes they might really be simpler to hint and recuperate than conventional high-value belongings when authorities have the proper instruments and coaching.

Chainalysis is proud to have contributed experience that can help policymakers and investigators worldwide in strengthening their asset restoration frameworks and demonstrating that crime doesn’t pay. Our analysis exhibits a considerable VA seizure opportunity: greater than $75 billion in on‑chain balances are linked to legal exercise general.

In this weblog, we’ll discover FATF’s key suggestions for digital asset investigations, the sensible instruments and methods authorities can deploy, and examples of profitable cryptocurrency recoveries from world wide.

Key suggestions for digital asset recoveries

1. Treat VAs as a definite asset class

FATF recommends that authorities deal with digital belongings as a definite type of asset class all through the whole restoration lifecycle — from identification and tracing by means of seizure, valuation, administration, and supreme disposal. This could require:

• legislative updates to explicitly empower authorities to seize, handle, and eliminate digital belongings successfully;
• clear home guidelines round VA seizure that investigators perceive and may implement;
• and specialised procedures that account for the distinctive traits of VAs.

2. Build operational capability from first contact

The steerage emphasizes that operational consciousness is crucial, particularly for legislation enforcement’s “first contact” with VAs. Officers want coaching to acknowledge {hardware} wallets throughout searches; seed phrases in paperwork or digital recordsdata; alternate accounts and pockets purposes on units; and VA holdings throughout varied platforms.

FATF particularly recommends that non-financial and non-money laundering personnel obtain coaching on digital belongings, acknowledging that VAs can floor in any investigation.

3. Integrate blockchain analytics

Perhaps most importantly, FATF emphasizes that authorities ought to combine blockchain analytics into VA investigations. The steerage notes that “public blockchains present immutable, real-time ledgers that will help speedy tracing and restoration” and that “it’s even potential that belongings in digital kind could be simpler to seize and monitor than conventional high-value items.”

The report particulars how Chainalyis’ blockchain evaluation instruments have gained courtroom acceptance, that includes the case examine on the Bitcoin Fog investigation (U.S. v. Sterlingov). In that case, the U.S. District Court, in a Daubert listening to, validated methods together with clustering heuristics and transaction tracing, to discover our instruments to be “extremely dependable” and admissible as proof in courtroom.

FATF’s steerage acknowledges a capability hole throughout nations — some have constructed inner blockchain evaluation functionality, whereas others ought to take into account contracting exterior suppliers. FATF advises that these prices could be justified given the worth and success price of digital asset recoveries, and jurisdictions ought to make investments proportionate to their VA publicity.

The lifecycle of a seizure

FATF’s steerage covers the complete lifecycle of digital asset seizures, from preliminary acquisition by means of long-term administration and eventual liquidation. Understanding each the technical seizure strategies and the continued custody challenges is crucial for profitable asset restoration.

1. Initial seizure

The steerage outlines three important pathways for seizing VAs:

1. Direct acquisition of personal keys: Obtaining the cryptographic non-public keys, together with seed phrases, that management pockets entry.
2. Recovery from exchange-based wallets: Working with Virtual Asset Service Providers (VASPs) to freeze and recuperate belongings held in custodial accounts.
3. Freezing performance by way of stablecoin suppliers: Leveraging centralized issuers’ technical skill to freeze, burn, and even reverse transfers primarily based on authorized orders.

On stablecoins particularly, FATF notes that issuers of centralized stablecoins “usually retain the power to freeze belongings and even reverse transfers primarily based on authorized orders.” Centrally issued stablecoins sometimes embody good contract features that enable issuers to freeze particular pockets addresses, completely burn tokens, or in some circumstances reverse or reassign tokens — all pursuant to legitimate authorized orders. Law enforcement companies ought to make use of this skill.

2. Managing seized VAs

Once VAs are seized, correct administration turns into crucial. FATF advises greatest practices together with:

• strong cybersecurity measures to defend towards hacking and fraud, resembling chilly storage options;
• partaking vetted VA custodians, as self-custody may include a sure diploma of complexity;
• clear procedures and documentation from seizure by means of liquidation;
• and consciousness of inherent dangers from VAs, together with asset value volatility, regulatory developments, and the precise traits of various token sorts; NFTs and meme cash, for instance, could have very totally different liquidity profiles than main VAs.

When it comes time to liquidate seized belongings, FATF recommends that asset managers “be delicate to the liquidity of the market and never overloading it in a manner that decreases the worth of the asset. This could entail phased liquidations, so the market shouldn’t be flooded .”

Real-time public-private partnerships

The steerage encourages rising public-private partnership (PPP) fashions geared toward “real-time crypto crime response.” While these partnerships facilitate speedy info sharing between legislation enforcement and the business, they will additionally speed up the transfer from detection to disruption of economic crime.

Operation Spincaster demonstrates how efficient public–non-public partnerships can flip real-time insights into real-world influence: working side-by-side with 12 public sector companies and 17 VA exchanges, Chainalysis helped establish illicit flows rapidly to disrupt and forestall approval-phishing scams, coordinate freezes throughout platforms, and protect high-quality proof for follow-on motion. Across the sprints, companions disseminated greater than 7,000 leads tied to roughly $162 million in losses, main to account closures, seizures, and intelligence to stop future scams — together with one case the place a sufferer was warned in time to revoke on-chain approvals and avert a six‑determine theft.

What this implies for companies

FATF is pushing jurisdictions to strengthen asset restoration, constructing on its clear expectations for digital belongings and VASPs below Recommendation 15 (VASP licensing, supervision, and threat assessments) and Recommendation 16 (the Travel Rule for digital belongings). Crucially, FATF explicitly notes that, with the proper instruments and coaching, digital belongings could be simpler to hint and recuperate than many conventional belongings—a powerful encouragement for companies to speed up digital asset investigative capabilities, operationalize blockchain analytics, and combine VA procedures into finish‑to‑finish asset restoration workflows.

How Chainalysis will help

The FATF steerage makes clear that efficient digital asset restoration requires the proper instruments, coaching, and operational capability. Chainalysis gives options designed to help companies all through the whole asset restoration lifecycle:

Chainalysis Reactor and Wallet Scan allow investigators to rapidly establish, hint, and attribute cryptocurrency transactions throughout a number of blockchains, offering the real-time intelligence wanted for speedy seizure choices.

Chainalysis Rapid helps legislation enforcement scale their crypto triage capabilities, permitting companies to rapidly assess whether or not cryptocurrency is concerned in a case and prioritize investigations accordingly.

Our Asset Seizure Certification gives specialised coaching that equips investigators with the talents to acknowledge, seize, and handle digital belongings successfully — addressing the “first contact” capability hole highlighted within the FATF steerage.

Want to study extra about how blockchain analytics helps asset restoration? Request a demo here.

 

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