TRM Labs, a blockchain intelligence firm, has released a new report highlighting that while Latin America continues to face significant illicit finance threats—including cartel-linked over-the-counter (OTC) brokers, sanctioned flows from Venezuela, and Chinese money laundering networks—regulatory frameworks are rapidly encircling these threats. The report emphasizes that stablecoins have become the dominant payment rails for illicit activity in the region, accounting for 95% of inflows to sanctioned entities globally.
Key Threats: Cartels and Stablecoins
The report reveals that the Sinaloa Cartel laundered over $103 billion in 2025 alone, leveraging local brokers and peer-to-peer exchanges with Chinese organizations acting as intermediaries. These flows are tied to illicit oil trade and drug trafficking, keeping Latin America in the enforcement spotlight. However, governments are moving quickly to close these loopholes.
Stablecoin Compliance Risk Escalates: With 95% of illicit inflows flowing through stablecoins, Virtual Asset Service Providers (VASPs) face pressure to upgrade their technology and compliance capabilities. New regulations across the region require VASPs to implement more stringent Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) measures.
Regulatory Progress in Three Countries
Brazil: New regulations passed in February 2026 establish a compliance framework requiring VASPs to meet AML and CFT requirements before receiving authorization to operate. VASPs must also report suspicious transactions to the central bank.
Argentina: Updated registration requirements for VASPs now include AML rules, audits, and asset segregation. All crypto service providers must register with the National Securities Commission (CNV) and submit compliance reports.
Mexico: Introduced risk-based assessments, designated compliance officers, and periodic compliance audits. Virtual asset activities remain confined to entities approved by the Central Bank of Mexico (Banxico), with strict AML standards enforced.
Compliance Advantage and Outlook
TRM Labs concludes: “For exchanges, fintechs, and financial institutions operating in Latin America, regulatory requirements are arriving across the region simultaneously. Institutions building compliance infrastructure ahead of enforcement deadlines carry a clear operating advantage.” The report advises firms to proactively deploy compliance technology to prepare for upcoming full enforcement.
The report also touches on Venezuela, noting that organic cryptocurrency adoption dominates trading volumes, with stablecoins serving as a key driver, although sanctions-related risks persist in the country.