The Financial Action Task Force (FATF), a global anti-money laundering, terrorist, and proliferation financing watchdog, conducted its plenary session from February 22 to February 24 and published the set of outcomes on its website.
In its report, the watchdog called for greater adoption of the Virtual Asset Service Provider Travel Rule to curb the flow of illegal funds using cryptocurrencies. It also laid out a roadmap that calls for improved regulation of virtual assets in FATF member states and FATF-style regional bodies (FSRB). Additionally, it will allow them to apply the Travel Rule and other anti-money laundering recommendations to crypto.
As the world’s money laundering authority, the FATF relies on autonomous, interdependent regional bodies (FSRBs) to turn recommendations into regulations. These bodies cover the Asia-Pacific, Caribbean, Eurasia, the Middle East, Latin America, and Africa.
According to the report, delegates attending the recent FATF Plenary in Paris, agreed on a plan to promote the enforcement of standards on the “transmission of originator and beneficiary information,” as implied in the modified Travel Rule. The FATF amended the Travel Rule in 2019 to bring in Virtual Asset Service Providers to collect and share data about the source and digital asset transfers of over $1,000.
Notably, the United States, whose threshold is $3,000, needed minimal changes to accommodate the FATF’s 2019 Travel Rule amendments since most requirements were already codified in the nation’s Bank Secrecy Act. However, Senator Elizabeth Warren and Roger Marshall have recently drafted a bill to cast a wider net around the crypto industry.
The proposed bill suggests re-classifying certain crypto entities as money services businesses. This designation among others will bring the firms under the Bank Secrecy Act’s umbrella and subject them to more record-keeping. The Bank Secrecy Act demands financial institutions maintain detailed records of all transactions and file reports regarding all transactions, currency exchanges, and certain monetary instruments’ transportation of more than $10,000.
However, Treasury regulation 31 CFR 103.29 prohibits financial institutions from issuing or selling monetary instruments purchased with cash in amounts of $3,000 to $10,000, inclusive, unless it obtains and records certain identifying information on the purchaser and specific transaction.
Additionally, at the plenary, the delegates decided to suspend the membership of the Russian Federation as the country’s war with Ukraine entered its second year. The FATF opined that Russia’s action had threatened global financial stability and violated the spirit of cooperation between the member states in eliminating illegal fund flows.
The FATF also placed Jordan on its “gray list” for digital asset risk assessment deficiencies, among several other things. The FATF has a gray list for nations that don’t follow its anti-money laundering (AML) regulations for cryptocurrencies. The FATF’s list of countries that it considers to be “Jurisdictions under Increased Monitoring” is known as the gray list.
Todayq News reported in November that the FATF is going to carry out annual audits to make sure nations are obeying AML and counter-terrorist funding (CTF) regulations on crypto providers. Reportedly, two countries that are known for their crypto activity, the United Arab Emirates (UAE) and the Philippines, are on the gray list as well, but according to FATF, both nations have made a “high-level political commitment” to cooperate with the organization to improve their AML and terror financing regulations.
Recently, The National Securities Commission (CNV) in Argentina said that it would soon establish and regulate requirements for crypto companies. According to the regulator, the requirements that crypto companies will have to follow ensure compliance with international standards required by the FATF.