Global Trustee and Fiduciary Services Bite-Sized Issue 8 2026

2 AIFMD CRYPTOASSETS EMIR FINTECH IOSCO MIFID II/MIFIR OPERATIONAL RESILIENCE SUSTAINABLE FINANCE/ESG T+1 ASIA PACIFIC EUROPE NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 8 | 2026 Quick Links Consultations Close: 14 October 2026 Chapters on depositaries, prime brokers and application of the AIFM business restriction: 18 September 2026 Implementation: Intended for 2028 Link to HMT Treasury Consultation here Link to FCA Consultation CP26/28 here CRYPTOASSETS Targeted Report on Regulatory Challenges fromDecentralised Finance On 21 July 2026, the Financial Action Task Force (FATF) published a report that highlights the rapid growth of decentralised finance (DeFi) and how its unique features are being increasingly exploited by illicit actors, including fraudsters, ransomware operators, professional money laundering networks and proliferation financing actors. The report clarifies that DeFi arrangements fall within the scope of the FATF Standard covering virtual assets (Recommendation 15), where a natural or legal person exercises control or sufficient influence over the arrangement. Although many DeFi arrangements present themselves as decentralised in terms of governance, the report finds that centralised elements frequently persist in practice including through governance token concentration, administrative privileges, control over upgrades, significant economic benefits, and influence over development and infrastructure. The report identifies a list of on-chain and off-chain indicators of control and sets out recommendations to help jurisdictions, and financial institutions, virtual asset service providers (VASPs) and DeFi arrangements to protect the integrity of the financial systemwhile also preventing and mitigating the criminal abuse of the DeFi ecosystem. The report underlines that financial institutions and VASPs that interact with or provide services to DeFi arrangements should comply, as appropriate, with the relevant FATF Recommendations, including Recommendations 15 (New Technologies), Recommendation 10 (Customer Due Diligence) and Recommendation 13 (Correspondent Banking). Where compliance with the FATF Standards cannot be achieved, they should refrain from interacting with such DeFi arrangements. The report goes on to highlight examples of criminal exploitation of DeFi platforms. In line with the FATF’s risk-based approach to fighting financial crime, the report underlines that jurisdictions with more significant DeFi activity should allocate more resources to understanding, supervising, and developing approaches to mitigate the illicit finance risks associated with DeFi arrangements. The report also sets out key recommendations for jurisdictions, DeFi arrangements and financial institutions and VASPs. It also includes case studies of good practice, such as how jurisdictions have: • Assessed the risks linked to DeFi arrangements; • Advanced efforts to develop an appropriate and proportionate regulatory framework for DeFi arrangements, including through smart contract certification; • Enhanced domestic co-operation between financial regulators and law enforcement authorities to support the supervision of DeFi arrangements; • Conducted regulatory thematic workshops and established public-private partnerships to promote understanding of risks and compliance in DeFi and advance asset tokenisation through open and interoperable network standards; • Set up a dedicated cryptocurrency investigation team to analyse and investigate the misuse of DeFi protocols by illicit actors; and • Shared information between financial intelligence units to detect cross-border DeFi-related risks, including through the Egmont Secure Web and FIU.net. Link to Report here