The Financial Action Task Force (FATF) has announced that its delegates, representing over 200 jurisdictions, have agreed on an action plan to promote the global implementation of crypto-currency standards.
The FATF plenary in Paris led to a consensus on a roadmap to improve the performance of FATF Standards. The focus is on virtual assets and VASPs, according to the announcement. However, the watchdog will report on FATF members’ progress in implementing crypto standards in 2024, including regulating and supervising VASPs.
According to the report, countries need to regulate virtual assets urgently. This is to prevent criminals and terrorist financiers from exploiting opportunities in jurisdictions with lax regulations. In addition, the FATF revised its Recommendation 15 in October 2018 to address virtual assets and VASPs.
FATF’s Travel Rule For Crypto Asset Transactions
Many countries have not implemented revised requirements, including the ‘travel rule.’ The ‘travel rule’ mandates obtaining, holding, and transmitting originator and beneficiary information in crypto-asset transactions.
The ‘Travel Rule’ also applies to crypto-currency transactions over a certain threshold amount. Compliance is crucial for VASPs, financial institutions, and regulated entities to avoid legal penalties and reputational damage. However, some experts have raised concerns about the potential negative impact on user privacy.
As of April 2022, the FATF reported that many countries did not comply with its standards on CFT and AML. The FATF reported these countries as non-compliant with its CFT and AML standards.
Japan, South Korea, and Singapore have implemented regulations following the travel rule. Additionally, reports indicate that Iran and North Korea are on the FATF’s ‘grey list’ for monitoring suspicious financial activity. The FATF placed Iran and North Korea on its ‘grey list’ due to concerns about the suspicious financial activity.
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The FATF’s latest announcement is expected to encourage more countries to implement necessary crypto regulations. This is to combat the risks associated with crypto assets. The announcement may raise awareness about the importance of combating money laundering and financing terrorism through effective regulation.
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