J5 Warns: OTC Crypto Desks Used for Laundering; Daily Volume $1.44B, $236B in Suspicious Activity

The J5, a coalition of tax authorities from the U.S., Canada, Australia, Netherlands, and the UK, issued advisories warning that over-the-counter (OTC) crypto trading desks and processors are being leveraged for obfuscation and money laundering. Average daily OTC trading volume reached $1.44B, compared to $74.5M on exchanges, with nearly $236B in suspicious activity reported to FinCEN since 2020. OTC desks provide anonymity for large transactions and are often not fully visible in blockchain analytics tools, enabling illicit actors to move proceeds from tax evasion and other crimes into traditional finance. Processor-related FinCEN reports rose over 1,000% from 2020–2024, totaling $5B. Regulatory responses include Hong Kong’s planned AMLO compliance for OTC desks and the JPEX fallout that exposed significant oversight gaps. Industry compliance measures include KYC/AML, real-time surveillance, and close collaboration with regulators to disrupt illicit flows.