In June 2020, the Financial Action Task Force (“FATF”) published a report which sets out the findings of the FATF on the 12-month review carried out by the latter on the implementation of the revised standards by jurisdictions and the private sector (the “Report”).
Overall, the FATF underlines that many jurisdictions and the private sector have made progress in implementing the revised FATF standards on virtual assets and virtual asset service providers (“VASPS”). However, challenges remain as some jurisdictions’ anti-money laundering and counter-terrorism financing (“AML-CTF”) regimes for VASPS are not yet operational whilst others have not yet established such regime.
The Report analyses the main trends in the virtual money laundering and terrorism financing (“ML-TF”) landscape and notices that even though the value of virtual assets involved in ML-TF cases has been relatively small, the virtual assets landscape seems to notably facilitate the layering of transactions involved in ML-TF schemes. Anonymity of transactions and the ability to carry out peer-to-peer operations have been identified as areas of vulnerability.
The Report stresses that the implementation of the AML-CTF obligations is globally at its early stages. VASPS are overall unfamiliar with AML-CTF requirements and may face challenges when required to implement certain rules (in particular the travel rule). Furthermore, the fast technological and business progress complicates adaptation to AML-CTF requirements.
The Report concludes that the following actions should be undertaken:
a second review should be conducted by June 2021 and consider whether updates to the revised standards on VASPS are necessary;
the FATF should release updated guidance for public and private sectors in particular in relation to the issues regarding stablecoins and the travel rules;
the FATF should promote the understanding of the public and national authorities of the ML-TF risks involved in the use of virtual assets;
the virtual assets contact group which is composed of representatives of VASPS, technology providers, technical experts and academics, should continue and enhance its engagement with the private sector;
the FATF should continue its program of work to enhance international cooperation amongst VASPS supervisors.
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