What Compliance Teams Need to Know About Tether (USDT) — A “Shadow Dollar” Changing Financial Crime
The new money pipeline
Imagine a dollar you could email — no banks, no borders, no questions asked. That’s Tether.
Tether is a privately issued digital coin that promises every token is worth one U.S. dollar. Unlike Bitcoin or Ethereum, it doesn’t swing wildly in price. One Tether is meant to equal one dollar, all the time.
That stability has made it useful for ordinary people in emerging markets: families sending remittances, shopkeepers trying to protect savings against inflation, students moving money across borders more cheaply than banks allow.
But the same features have also made it the currency of choice for criminals, fraudsters, and sanctioned actors worldwide.
Why criminals love it
For decades, dirty money has had the same problem: how to move from piles of cash into the global economy without being detected.
Cash is bulky. Moving bags of notes across borders is risky.
Banks ask questions. Large deposits or transfers trigger suspicious activity reports.
Traditional laundering is expensive. The cut for professional launderers is often 10% or more.
Tether changes the equation. It lets gangs turn cash into a digital dollar they can send instantly across borders, with almost no cost and far less scrutiny.
Scam compounds in Southeast Asia use Tether to collect money stolen from victims worldwide.
Russian oligarchs and ransomware groups have used it to dodge sanctions and move millions into safe havens.
Drug gangs in Europe are swapping bulk cash into Tether to pay suppliers overseas in seconds.
What used to require suitcases of cash or layers of shell companies can now be done with a phone and an internet connection.
Why regulators are waking up
Stablecoins like Tether now operate like shadow banks: enormous pools of money moving outside the regulated system. Tether alone has issued more than $100 billion worth of tokens, making it one of the largest holders of U.S. Treasury bills in the world.
That scale is drawing attention — but also support in some quarters.
The U.S. has shifted its stance. In 2025, Congress passed the GENIUS Act, requiring stablecoin issuers to hold 100% of reserves in cash or near-cash assets and publish monthly reports. On paper, this was about protecting consumers. In practice, it also locks stablecoins more tightly into the U.S. financial system.
Why the US embrace? Stablecoins like Tether expand the reach of the U.S. dollar into places where American banks don’t operate — from African remittance corridors to Asian crypto markets. And because Tether invests its reserves in U.S. Treasuries, it has become a major buyer of American debt. Put simply: every new token issued is another dollar tied to U.S. financial power.
Meanwhile in Europe. The U.K. and EU have flagged Tether in investigations into organised crime and sanctions evasion.
And globally. The UN has warned that Tether is powering new kinds of money laundering in Southeast Asia’s scam and trafficking networks.
For compliance officers, the message is clear: stablecoins are no longer a side issue — they are both a geopolitical tool and the new frontline in AML.
What compliance teams should do
Even if your institution doesn’t “do crypto,” your clients and counterparties might already be touching Tether through remittance apps, peer-to-peer brokers, or informal networks.
Here are practical steps to take:
Update your risk assessments: add stablecoins like Tether as channels for potential laundering.
Expand sanctions screening: wallets and stablecoin transfers can breach sanctions just as easily as bank wires. Screen crypto wallets just as you would bank accounts. There are databases of sanctioned wallets (OFAC, EU lists) and compliance teams can integrate these feeds into transaction monitoring, so when a client interacts with a “tainted” wallet, it’s treated like a normal sanctions hit.
Watch for red flags:
Sudden cash deposits linked to crypto brokers.
Clients wiring funds to exchanges that specialise in Tether.
Rapid cross-border transfers that look “too clean” compared to a customer’s usual profile.
Check your vendors: ask if their monitoring tools cover Tether on TRON, the blockchain where most illicit flows are happening.
Why this matters in Africa and Asia
Across emerging markets, stablecoins are filling real gaps:
Remittance corridors: Families are bypassing traditional money transfer operators because Tether is faster and cheaper.
Informal finance: Where bank access is limited, stablecoins are becoming the workaround — but without compliance checks.
Regulatory change: Countries like Kenya, Nigeria, and Indonesia are drafting new crypto and stablecoin rules. Smaller banks, co-ops, and remitters cannot assume this is just a “crypto problem.” It is quickly becoming a mainstream compliance issue.
The compliance opportunity
Tether is both a risk and a warning. It shows how quickly criminals adopt new tools — but also how regulators will follow.
For compliance teams in Africa and Asia, now is the moment to get ahead:
Build awareness inside your institution.
Treat stablecoins like Tether as part of your AML framework.
Ensure your monitoring tools can see into the “shadow dollar” economy.
Because if your clients are already using Tether — and many are — you need to be ready before the regulator asks.
Keen to know more? Let’s talk.