Key takeaways
- The updated FATF report indicates that 83% of surveyed jurisdictions have advanced crypto regulation and travel rule.
- The task force called for stricter oversight of offshore virtual asset providers to close illicit regulatory loopholes.
- The FATF has warned that criminals are exploiting weak links, citing a new illicit stablecoin designed to resist asset freezes.
Financial Action Task Force calls for increased oversight of digital assets
The Financial Action Task Force (FATF) has published its 7th targeted update on the implementation of the FATF standards on virtual assets and virtual asset service providers. This report describes the state of digital asset regulation and remaining weaknesses in monitoring criminal activity.
Although the report recognizes that crypto Regulation and implementation of FATF Recommendation 15, including the Travel Rule, has progressed in 83% of jurisdictions surveyed, with 11 jurisdictions still working on it.
Recommendation 15 calls for the regulation of virtual asset service providers (VASPs) and monitoring of existing anti-money laundering and anti-terrorism financing (AML/CFT) risks.
On Thursday, the FATF called for further work on the regulation, licensing and registration of VASPs to close remaining loopholes exploited by bad actors for illicit purposes.
Dealing with offshore VASPs, institutions registered in jurisdictions with weak or underdeveloped regulation and which may offer their services in other markets, is mentioned as a risk mitigation challenge in some jurisdictions.
The misuse of stablecoins is also a relevant factor for the FATF, which recorded a case of issuance of a stablecoin by a Cambodia-based money laundering node that was marketed as immune to asset freezing, a feature common to all regulated centralized stablecoins.
FATF President Giles Thomson stressed that the implementation of the FATF standards can no longer be delayed, as “Criminal networks continue to misuse virtual assets for illicit purposes and exploit their borderless nature to commit fraud and scams, evade sanctions and launder the proceeds of crime. »
“Governments and the private sector must work together to strengthen preventive measures and close regulatory gaps, strengthen cross-border cooperation and deny criminals the opportunity to exploit weak links in the global system. » he concluded.
