The FATF’s annual crypto review highlights “continued use of anonymity tactics” and “lack of effective” regulation – regulation Bitcoin News

The Financial Action Task Force (FATF) released the organization’s 12-month report, and the investigation shows that only 45% of the 128 reporting jurisdictions have complied with the AML / CFT policy and FATF recommendations. The annual review emphasizes that the “shortage” [of] effective “regulation makes it a challenge for competent authorities to follow the transaction path and give criminals more time to move the proceeds of crime”.

Less than half of the reporting jurisdictions meet the FATF’s crypto compliance standards

In recent years, the intergovernmental organization of the FATF has focused on Virtual Assets (VA) and Virtual Asset Service Providers (VASPs). The FATF is a group dedicated to the global fight against money laundering (ML) and terrorist financing (TF). Bitcoin.com News recently reported on how the FATF applied the Travel Rule to stablecoins, decentralized finance (defi) and non-fungible tokens (NFT). In addition, the intergovernmental organization has investigated the regulation of non-custody wallets.

According to the 12-month review and the FATF researcher’s findings, only 45% of the 128 reporting jurisdictions have complied with the organization’s recommendations and standard anti-money laundering and terrorist financing policy. The report highlights two trends since the last 12 month FATF review of VAs and VASPs. The FATF has identified “the use of VASPs registered or operating in jurisdictions lacking effective AML / CFT regulation, as well as the use of multiple VASPs (local and / or overseas). This makes it more difficult for the relevant authorities to follow the transaction paths and give criminals more time to move criminal proceeds, ”the company notes.

The global financial regulator has also observed the continued use of anonymity tactics applied to the cryptocurrency sector and related transactions. In the aftermath of the Covid-19 outbreak, the FATF “observed the increased use of virtual assets to move and hide illicit funds. One jurisdiction reported using virtual assets to launder revenue from COVID-19 drug sales. ”The FATF researchers believe regulators need to understand the situation better, but instead they are focusing on“ stablecoins ”and“ mass adoption “. One of the main trends in the cryptocurrency ML / TF risk landscape since June 2019 includes:

The continued use of tools and methods to increase the anonymity of transactions. This includes the registration of Internet domain names via proxies and the use of DNS registrars who suppress or edit the real owners of the domain names, the use of tumblers, mixers and anonymity-enhanced cryptocurrencies or privacy coins, the use of decentralized exchanges and Applications, chain hopping and atomic swapping exchanges and dusting.

FATF hopes that jurisdictions will put in place regulations and dissuasive sanctions against non-compliant VASPs

The gist of the 23-page report is that the FATF is focused on getting the jurisdictions to implement money laundering and TF regulations as needed. In a press release, the global regulator insisted that “the majority of jurisdictions have not yet implemented the requirements of the FATF, including the ‘travel rule’, and this discourages further investment in the necessary technology solutions and compliance infrastructure”.

According to the report, countries must mandate that all VASPs comply with regulation and oversight or supervision for AML / CFT. Countries must also ensure that there are “effective, proportionate and dissuasive sanctions, whether criminal, civil or administrative” in place to address violations of VASPs. “Sanctions should not only apply to VASPs, but also to their directors and senior management,” the report said.

The main objective highlighted in the FATF report indicates the goals of the global regulator:

  • The threshold for occasional transactions above which VASPs are required to conduct customer due diligence is USD / EUR 1,000.
  • countries [to] ensure that original VASPs obtain and retain the required and accurate originator information and required beneficiary information in the event of virtual asset transfers.
  • Monitoring the availability of information and taking blocking measures and prohibiting transactions with named persons and entities.

What do you think of the FATF’s latest 12 month review on VAs and VASPs? Let us know what you think on this matter in the comments below.

Tags in this story

12-month report, AML / CFT, anonymity, bitcoin, compliance infrastructure, crypto, cryptocurrency, DeFi, fatf, global regulator, money laundering, noncustodial, regulation, supervisory authorities, sanctions, terrorist financing, VA, VAs, vasp, VASPs

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