Preparing for stablecoin oversight under the GENIUS Act

The financial regulatory landscape is undergoing a transformative shift. As digital assets gain traction, global risks emerge, and stablecoins move closer to mainstream adoption, policymakers are responding with new frameworks to ensure rapid transparency, accountability, and financial integrity. The recently enacted GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) is a landmark development in this space, introducing a formal regulatory structure for stablecoin issuance in the United States. 

For AML and sanctions professionals, the GENIUS Act is a call to action—one that requires institutions to modernize compliance programs, rethink risk frameworks, and prepare for a new era of digital asset oversight—many for the first time.

Understanding the GENIUS Act

Under the new law, both banking and non-banking public institutions can issue payment stablecoins, provided they meet strict regulatory requirements. These issuers are now classified as financial institutions under the Bank Secrecy Act (BSA), bringing them under the umbrella of U.S. financial crime laws—including AML and sanctions compliance.

Key provisions include:

• 1:1 reserve backing for all outstanding stablecoins
• Monthly public disclosures on the quantity of stablecoins in circulation and the composition of reserve assets 
• Mandatory AML and sanctions programs tailored to the risks of digital assets

This shift signals a move toward institutional-grade oversight. Issuers must now implement robust compliance frameworks that address the speed, scale, and pseudonymity of blockchain-based transactions.

What this means for AML and sanctions teams

The GENIUS act introduces new operational expectations for compliance professionals. Whether you’re part of a traditional financial institution or a non-bank entity exploring stablecoin issuance, your compliance program must evolve to meet these elevated standards. Here’s what to prioritize:

1. Build or adapt a risk-based AML and sanctions program
Issuers must maintain a comprehensive compliance framework that reflects the unique risks of stablecoins. This includes:

• Customer identification and verification (KYC)
• Risk scoring methodologies tailored to digital asset users
• Ongoing monitoring and screening of both blockchain and fiat transactions
• Governance updates to reflect new product risks and regulatory expectations

Programs should be agile—able to scale with transaction volume and adapt to emerging threats. Financial institutions will need to ensure, in real time, that stablecoin activities—customer onboarding, transactions, redemptions—do not involve sanctioned individuals, entities, or jurisdictions. 

2. Implement on-chain monitoring and sanctions screening
Legacy transaction monitoring tools are not designed for blockchain. Issuers must integrate blockchain analytics platforms that can:

• Monitor wallet activity in real time
• Trace the flow of funds across the blockchain 
• Detect exposure to sanctioned entities, jurisdictions, or illicit typologies consistent with money laundering

This level of visibility is essential for identifying suspicious activity and ensuring compliance with The Office of Foreign Assets Control (OFAC) and Bank Secrecy Act (BSA) requirements.


Preparing for implementation: A one-year runway

The GENIUS Act provides a one-year transition window for issuers and state-chartered entities to align with its requirements. Use this time strategically to: 

Conduct a GENIUS Act gap assessment
Begin with a comprehensive review of your current AML and sanctions program. Identify gaps in governance, KYC and customer onboarding, transaction monitoring, and technology. Prioritize areas where digital asset risks are not yet addressed.  

Design and develop core program components
Modernize compliance frameworks to reflect the realities of stablecoin issuance. This includes:

• Updating KYC and onboarding procedures
• Enhancing investigative and escalation protocols
• Establishing escalation pathways for blockchain-related alerts

Select and integrate blockchain analytics tools
Choose a blockchain surveillance platform that aligns with your institution’s risk profile. Focus on:

• Vendor evaluation and selection
• Rule configuration and testing and testing
• Ongoing optimization for stablecoin-specific use cases

Scale staffing and managed services
As stablecoin adoption grows, so will the volume of transactions and alerts. Consider managed services to:

• Support KYC and sanctions screening
• Handle transaction monitoring surges
• Maintain compliance continuity during growth phases

Scalable support ensures your team can keep pace without compromising quality.

Train teams and engage leadership 
Compliance is a team sport. Ensure your investigators, analysts, board, and leadership are aligned on the risks and responsibilities of stablecoin issuance. Tailored training sessions should cover:

• Blockchain forensics and wallet attribution
• SAR narrative development for digital assets
• Board-level awareness of regulatory trends and strategic implications 

The GENIUS Act is a turning point for digital asset regulation

For AML and sanctions professionals, it’s an opportunity to lead—by building resilient, tech-enabled compliance programs that meet today’s challenges and anticipate tomorrow’s.

Guidehouse helps institutions bridge the gap between regulatory intent and operational execution. Our approach combines deep regulatory expertise with advanced technology solutions to help you move fast, stay compliant, and build trust in a rapidly evolving financial ecosystem.