Back in October 2018, the Financial Action Task Force (FATF) provided a definition of “virtual assets” a.k.a. cryptocurrencies and said they would produce guidance in June 2019 on how to treat these.
Last week, at their February Plenary the group issued a draft “Interpretive Note” to FATF Recommendation 15 which gives a strong indication of what this guidance will look like. If crypto fans and operators were expecting to be able to continue in their unregulated utopia, they will be sorely disappointed.
The Interpretive Note brings in 8 new provisions which impact both competent authorities and obliged entities. The provisions are summarized below:
Monitoring & supervision:
FATF has gone pretty much as far as it can to manage AML/CFT risk in the cryptosphere. In doing so they will remove the factors that make virtual assets notable: anonymity and lack of supervision. The Note may borrow from established crypto regimes, such as those in Japan and Australia, but the treatment of transactions as if they were wire transfers is a new perspective which is likely to be highly controversial. Deriving sender and beneficiary information in a traditionally anonymous world will prove challenging and could be a serious barrier to the success of this guidance. Fortunately, FATF is consulting on this point (submissions will be accepted until April 8th) so VASPs will have the opportunity to challenge this stipulation. If this Interpretive Note is adopted and transposed into domestic legislation VASPs will likely find themselves as regulated as a traditional bank.
If you are a virtual asset service provider and would like to learn more about how ComplyAdvantage can help you comply with the FATF 40 recommendations click here to get in touch.
What else happened at the FATF Plenary:
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