The Financial Action Task Force adopted its new rules on crypto assets and published its updated Guidance on Virtual Assets and Virtual Asset Service Providers Friday. Under these new measures, crypto service providers will be required to implement the same requirements as traditional financial institutions.
The Financial Action Task Force (FATF), an independent inter-governmental body that develops and promotes policies to protect the global financial system against threats such as money laundering and terrorist financing, wrapped up its Plenary Week Friday in Orlando, Florida.
At the closing of the event, the FATF announced that it had adopted and issued “an Interpretive Note to Recommendation 15 on New Technologies,” which clarifies the amendments to the international standards relating to crypto assets and describes how countries must comply with relevant recommendations.
“The obligations require countries to assess and mitigate their risks associated with virtual asset activities and service providers,” and “implement sanctions and other enforcement measures when service providers fail to comply with their AML/CFT obligations,” the FATF explained. They are also required to “license or register service providers and subject them to supervision or monitoring by competent national authorities,” and “will not be permitted to rely on a self-regulatory body for supervision or monitoring.” The FATF clarified:
The FATF also published its updated Guidance on Friday for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers “to further assist countries and providers of virtual asset products and services in understanding and complying with their AML/CFT obligations.” This guidance builds upon its 2015 guidance paper.
Mnuchin commented that “By issuing updated guidance, the FATF is enhancing financial transparency and setting expectations,” noting that “This will enforce a level playing field for virtual asset service providers, including cryptocurrency providers, and traditional financial institutions.”
He detailed that crypto service providers will need to “Identify who they are sending funds on behalf of, and who is the recipient of those funds.” They will also need to “Develop processes where they are required to share that information with other providers of virtual assets, and law enforcement.” Further, they need to “Know their customers and conduct proper due diligence to ensure they are not engaging in illicit activity,” as well as “Develop risk-based programs that account for the risks in their particular type of business.” He further remarked:
At the recent G20 Finance Minister and Central Bank Governors Meeting in Fukuoka, Japan, the member countries reaffirmed their support for the FATF’s new guidance. Some countries have already started implementing the FATF’s recommendations. The FATF has 38 members, comprising 36 jurisdictions and two regional organizations.
“Today, the FATF has successfully delivered on the G20 call to regulate and supervise virtual asset activities and related service providers for AML/CFT,” the FATF declared, emphasizing:
The FATF also announced that it will closely monitor the actions that countries are taking during the next 12 months and establish a Contact Group to engage industry and monitor industry-led efforts to enhance compliance with its standards. “The FATF will monitor implementation of the new requirements by countries and service providers and conduct a 12-month review in June 2020,” the money laundering watchdog reiterated, adding that it is now devising a methodology to assess how countries implement its new requirements for the October Plenary.