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FATF-GAFI: Crypto-exchanges should present account statements of investors

FATF remains vigilant and closely supervises the virtual asset sector and providers such as crypto-exchanges. The published guide will help countries and service providers “understand their obligations.”

The Financial Action Task Force (FATF), published past Thursday 28th, updates its guide to regulate the service providers of cryptocurrencies and virtual assets globally.

Among the many recommendations published in the guide, they plan to regulate and even reduce peer-to-peer (P2P) transactions. 

According to the FATF, many of the crimes related to money laundering and terrorist financing are committed through cryptocurrencies.

As specified, countries can consider and implement “appropriate options” to mitigate crime risks at the national level.

Which are? Among the various existing ones, the controls that facilitate the visibility of P2P activity stand out and the crossing of the movement of virtual assets “between obligated entities and non-obligated entities,” such as exchanges, custodial wallets, and other intrinsic products of the ecosystem.

They add that such controls can include equivalents to reports of monetary transactions (such as a bank statement) or even a record-keeping rule related to those transfers.

Another measure recommended by the FATF to countries is risk-based “continuous enhanced supervision” of cryptocurrency service providers and entities operating in the ecosystem, “with a specific focus on transactions” executed with wallets. and other services, including site monitoring “to confirm whether an operator has complied with current regulations.”

They also recommend forcing operators to allow transactions only to and from addresses “deemed acceptable,” based on the risk-based approach.

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Furthermore, authorities can issue public notices and conduct information campaigns “to raise awareness of the risks posed by P2P transactions.”

FATF remains vigilant and closely supervises the virtual asset sector and providers such as crypto-exchanges. The published guide will help countries and service providers "understand their obligations."
The guide updates the clarification of the definitions of virtual assets and service providers. // Source: Crypto news

Limit anonymous operations with stablecoins

In the document, more than 100 pages long and the update of the first one presented in 2019, they also talk about stablecoins. 

They admit that, right now, there is a wide variety of entities that are involved with these assets and that, therefore, they should have a “central developer or governing body” to regulate them.

As required, a governing body, which consists of one or more natural or legal persons, can establish the rules that govern the operation of a stablecoin and determine its functionalities or who can access them.

For them, stablecoins can be more centralized or decentralized, both in their governance and who can access them. For this reason, and like other virtual assets, “it is important that the money laundering and terrorist financing risks of stablecoins (…) are analyzed continuously and with a vision of the future”.

The FATF suggests, around the mitigation of risks with stablecoins, that, among the possible measures, is limiting the scope of the ability of users to carry out transactions anonymously, controlling who can access the currency. The integration of preventive measures is also highlighted by ensuring that obligations are met “through the use of software to monitor transactions and detect suspicious activities,” for example.

Supervisors should seek that these mitigation measures are in place before licensing or licensing and on an ongoing basis. It will be more challenging to mitigate the risks of these products once they are launched.

Financial Action Task Force (GAFI).
The FATF updated its 2019 report, with its sights set on P2P. // Source: Twitter.

A ‘risk assessment.’

Meanwhile, the FATF recommends that national authorities conduct a “risk assessment” linked to virtual assets. The study, they specify, should bring together all the relevant authorities “to understand how specific virtual asset products and services work.”

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Countries should consider undertaking short- and long-term policy work to develop regulatory and supervisory frameworks for the activities of cryptocurrencies and service providers (as well as other obligated entities operating in the ecosystem).

Financial Action Task Force (GAFI).

They insist that countries should also require service providers and other entities related to the emerging market to identify, evaluate and take effective measures “to mitigate the risks associated with money laundering and terrorist financing.”

According to the FATF, when service providers, such as exchanges or custodial digital wallets, operate under the law of a country, they must assess the possible crimes they may commit. 

In addition, apply a risk-based approach “to ensure that the appropriate measures to prevent or mitigate these risks are implemented.”

Guide update

This publication is nothing more than the update of the first guide of 2019, which precisely sought to regulate all the activity of bitcoin and cryptocurrencies around the world.

According to the FATF information on its official website, the guide intends for countries to assess and mitigate the alleged risks associated with financial activities and providers of virtual assets.

As they explain, the guide “will help countries and service providers to understand their obligations against money laundering and terrorist financing, and to effectively implement the FATF requirements as they apply to this sector.”

This guidance addresses the areas identified in the FATF 12-Month Review of the FATF Revised Standards on Virtual Assets and Virtual Asset Service Providers that require further clarification and also reflects input from a public consultation in March-April 2021.

Financial Action Task Force (GAFI).

They specify that from GAFI, which is an independent intergovernmental regulatory body, they continue to monitor and closely monitor the virtual assets sector and providers “to detect any material change that requires further review or clarification of the FATF Standards.”

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The information expressed in this article is solely those of the author and do not necessarily reflect the vies of CryptoDeFinance.  Each and every investment and trading move involves high risk. You should always conduct your own research when making a decision in crypto investment.
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Bruno Marques

Hi! I am the CEO/Founder of Crypto DeFinance, and I am an Enthusiast crypto investor. I started this project so we can provide you with carefully curated news. If you like us and our news, share the posts and comment. Your visit and interaction is very important to us.
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