Bridging BaFin’s AML Gaps with AI-Driven KYT: The Future of Crypto Compliance in Germany

BaFin’s on-site inspections highlight critical shortcomings in AML compliance, particularly in transaction monitoring, risk assessment, and regulatory adherence. While the original report focuses on traditional financial institutions, the same challenges—and even greater complexities—apply to crypto assets and blockchain-based financial services under BaFin’s regulatory scope.

Credit: Reuters

With Germany's crypto and Web3 ecosystem rapidly evolving in 2025, BaFin has tightened oversight on crypto firms, requiring them to adhere to the same AML standards as banks and fintech companies. AI-driven KYT (Know Your Transaction) and blockchain investigation solutions are essential to addressing these regulatory challenges efficiently and proactively.

BaFin’s Approach to Crypto Assets

BaFin has taken a structured approach to regulating crypto assets, ensuring compliance with both national and EU frameworks. Since 2020, BaFin has classified crypto assets as financial instruments under the German Banking Act (KWG), requiring companies offering crypto custody, exchange, or brokerage services to obtain a BaFin license. This aligns with the Markets in Crypto-Assets (MiCA) Regulation, set to take full effect in 2025. 

BaFin also oversees crypto custodians, ensuring AML/CTF compliance for firms holding digital assets on behalf of customers, with companies like Coinbase Germany GmbH and Boerse Stuttgart Digital securing BaFin approval. Crypto businesses operating in Germany must adhere to AML/CTF regulations under the Money Laundering Act (GwG), including KYT and transaction monitoring requirements. 

To enforce compliance, BaFin conducts on-site inspections, similar to its oversight of traditional financial institutions. Additionally, BaFin differentiates between security tokens (regulated financial instruments) and utility tokens (unregulated unless classified as investment products), requiring companies issuing tokenized assets to follow strict prospectus and licensing requirements under Germany’s Securities Prospectus Act. 

In 2025, BaFin has increased scrutiny on DeFi platforms and NFT-based financial services, ensuring they do not circumvent financial regulations. The German government is collaborating with BaFin to align national crypto policies with MiCA, focusing on stablecoin issuance and crypto exchange operations. Furthermore, BaFin-approved crypto ETFs and structured financial products are gaining traction, accelerating crypto integration into traditional finance (TradFi).

Link to our findings 

AI-Driven AML Compliance: The Future of Crypto Risk Management

As Germany’s crypto and Web3 ecosystem rapidly expands, BaFin’s regulatory scrutiny is intensifying, making compliance a proactive necessity rather than a reactive obligation. Traditional AML frameworks struggle to keep pace with the evolving nature of crypto transactions, DeFi protocols, and tokenized assets. Nominis leverages law enforcement-grade intelligence to detect and prevent money laundering and illicit financing with unmatched speed and efficiency.

AI-driven KYT and blockchain investigation platforms offer a next-generation compliance solution by:

☑️ Automating AML compliance, reducing workloads and operational costs by 80%.

☑️Providing real-time blockchain monitoring, detecting and flagging illicit transactions before they escalate.

☑️Delivering comprehensive risk intelligence, integrating on-chain analytics, dark web insights, and OSINT to close gaps in traditional monitoring systems.

☑️ Ensuring scalable, future-proof compliance, seamlessly adapting to BaFin’s evolving AML regulations and the broader MiCA framework.

With BaFin tightening regulations on crypto assets, financial institutions and VASPs must adopt AI-driven AML solutions to remain compliant, mitigate financial crime risks, and safeguard the integrity of the digital economy.

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