Global Finance Highly Vulnerable to Proliferation Financing, FATF Warns

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A report released on 20 June 2025 by the Financial Action Task Force (FATF) highlights significant shortcomings in the global financial system’s defenses against proliferation financing (PF)—the funding of weapons of mass destruction (WMD). 

The report, Complex Proliferation Financing and Sanctions Evasion Schemes, reveals that only 16% of assessed jurisdictions show “high or substantial effectiveness” in implementing targeted UN financial sanctions on proliferation financing.

The FATF names North Korea as the most significant actor in terms of global PF threat, noting its sophisticated use of cyberattacks on virtual asset companies to finance its WMD programs, including the February 2025 theft of $1.5 billion from ByBit, the largest ever attack of its kind. 

Four main strategies to evade PF sanctions are identified: using intermediaries; hiding beneficial ownership information; using virtual assets; and manipulating the maritime and shipping sectors.

In the report, the FATF gives advice to help the public and private sectors better detect attempts to evade sanctions. The FATF also urges a stronger, more coordinated international response, information sharing by promoting public-private partnerships, and clearer guidance in the financial sector on when to report suspicious activity. 

In addition to the threat posed to virtual asset companies, the report highlights the importance of compliance with FATF recommendations in public and private sectors to limit WMD financing and prevent potentially disastrous consequences.