• The Financial Action Task Force (FATF) announced the outcome of its plenary which took place on Feb. 22-24.
• Delegates from over 200 jurisdictions agreed on an action plan to drive global implementation of FATF standards relating to virtual assets (crypto assets).
• Many countries have failed to implement the “travel rule” in relation to crypto assets, which requires originator and beneficiary information to be obtained, held and transmitted.
The Financial Action Task Force (FATF), an intergovernmental organization established to combat money laundering and the financing of terrorism, announced Friday the outcome of its plenary which took place on Feb. 22-24 with delegates from over 200 jurisdictions agreeing on an action plan for timely implementation of FATF standards on crypto assets.
Action Plan Agreed Upon
Delegates further agreed on an action plan to drive timely global implementation of FATF standards relating to virtual assets (also termed crypto assets) globally, including on the transmission of originator and beneficiary information. The lack of regulation of virtual assets in many countries creates opportunities that criminals and terrorist financiers exploit, as many countries have failed to implement these revised requirements, including the ‚travel rule‘ which requires obtaining, holding and transmitting originator and beneficiary information relating to virtual assets transactions.
Global Network Involvement
The FATF relies on a global network of FATF-Style Regional Bodies (FSRBs), in addition to its own members, to achieve global implementation of its recommendations. Thus, delegates agreed on a roadmap aimed at strengthening implementation of FATF standards related to virtual asset service providers that will include a stocktake assessment across the global network by mid 2024.
Objectives & Challenges
The main objectives are preventing criminals from exploiting digital currencies for money laundering purposes while also ensuring compliance with regulations is not overly burdensome for businesses operating in this space. The challenge is striking a balance between enforcement efforts against financial crime while also fostering innovation in fintech services involving cryptocurrencies or other digital tokens or coins.
In conclusion, there is still much work left before international regulatory bodies can effectively address all aspects involved with cryptocurrency usage such as anti-money laundering policies and consumer protection measures; however this agreement by over 200 jurisdictions is certainly a step forward towards realizing this objective.