Most nations yet to implement FATF’s anti-money laundering standards for crypto – Mint

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In India, trading, investing, or holding cryptocurrencies is not banned, however, lack of clarity on their regulations is a major cause of concern for investors as well as the industry. (REUTERS)Premium
In India, trading, investing, or holding cryptocurrencies is not banned, however, lack of clarity on their regulations is a major cause of concern for investors as well as the industry. (REUTERS)

2 min read . Updated: 26 Jun 2021, 09:10 AM IST Livemint

  • Without naming specific countries in its report, the intergovernmental agency said, so far, 58 out of 128 reporting jurisdictions have implemented the revised FATF standards, with 52 of these regulating VASPs and six of these prohibiting the operation of VASPs

Intergovernmental anti-money laundering body, the Financial Action Task Force (FATF), has said majority of reporting countries still haven’t implemented revised standards on virtual assets and virtual asset service providers (VASPs) such as cryptocurrency exchanges.

FATF is the global anti-money laundering and terror financing watchdog, and it sets international standards that aim to prevent these illegal activities.

Without naming specific countries in its report, the intergovernmental agency said that, so far, 58 out of 128 reporting jurisdictions have implemented the revised FATF standards, with 52 of these regulating VASPs and six of these prohibiting the operation of VASPs.

FATF said that these gaps in implementation mean that we do not yet have global safeguards to prevent the misuse of VASPs for money laundering or terror financing.

“The lack of regulation or implementation of regulation in jurisdictions can enable continued misuse of virtual assets through jurisdictional arbitrage,” FATF said after its five-day plenary session, which concluded on Friday.

In June 2019, FATF had finalized amendments to its global standards to clearly place anti-money laundering (AML) and counter-terrorism financing (CFT) requirements on virtual assets and VASPs.

The agency had also agreed to undertake a 12-month review to measure the implementation of the revised standards by jurisdictions and the private sector, as well as monitoring for any changes in the typologies, risks and the market structure of the virtual assets sector.

FATF in its latest report highlighted the need for all jurisdictions to implement the revised standards, as quickly as possible. The report also identified potential future FATF actions to prevent the misuse of virtual assets for criminal activities, including placing emphasis on actions to help mitigate the risk of ransomware-related virtual asset use.

The agency, meanwhile, acknowledged that the private sector has made progress in developing technological solutions to enable the implementation of the ‘travel rule’.

FATF’s ‘travel rule’ requires cryptocurrency exchanges, digital wallet providers and financial institutions dealing with crypto assets to share the identities of users involved with any virtual asset transfers.

However, majority of countries have not yet implemented FATF’s requirements, including the “travel rule”.

Meanwhile, the Reserve Bank of India (RBI) had earlier instructed lending institutions to carry out customer due diligence processes in line with regulations governing standards for know your customer (KYC), AML, CFT, Prevention of Money Laundering Act (PMLA) and Foreign Exchange Management Act (FEMA) while dealing with crypto businesses.

In India, trading, investing, or holding cryptocurrencies is not banned, however, lack of clarity on their regulations is a major cause of concern for investors as well as the industry.

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