FATF releases AML Guidelines for cryptocurrencies ahead of V20 Meeting

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FATF is watching you

The Financial Action Task Force (FATF) has released its paper on Anti-Money-Laundering Guidelines for Cryptocurrencies ahead of the V20 Meeting happening later this week.

The proposed guidelines aim to regulate the cryptocurrency markets and businesses and enforce stricter KYC and AML procedures.

Guidance for a risk-based approach to virtual assets

The 57-page paper released on June 21st contains an amendment to the FATF regulatory guidelines that focuses on virtual assets. It includes an initial risk assessment and guidance on how countries and authorities can implement FATF standards regarding licensing, registration, training and preventive measures.

FATF Guidelines
The contents of the guidelines released by the FATF on June 21st.

Back in October 2018, the FATF had begun adding virtual currencies to their scope and introduced definitions for virtual assets (VA) and virtual asset service providers (VASP). The published paper presents the results of one year of monitoring and research regarding Virtual Assets by the FATF.

The FATF cites anti-money laundering and combating the financing of terrorism as their main purpose for releasing the amended Recommendation 15 regarding virtual assets.

Recommendation 15 – New Technologies

Recommendation 15 was amended to the FATF guideline with the published paper is aimed at countries and financial institutions on how to identify money laundering and terrorist financing risks that may arise concerning new products or business practices within the financial industry.

Regarding Virtual Assets, recommendation 15 states:

“To manage and mitigate the risks emerging from virtual assets, countries should ensure that virtual asset service providers are regulated for AML/CFT purposes and licensed or registered and subject to effective systems for monitoring and ensuring compliance with the relevant measures called for in the FATF regulations.”

The FATF’s stance on Virtual Assets

The paper makes it clear that the FATF sees a major threat in cryptocurrencies in regard to money laundering and terrorism financing.

The paper states that “The inherently global nature of the digital asset ecosystem makes digital asset activities particularly well suited for carrying out and facilitating crimes that are transnational in nature.” and continues to highlight the role the U.S. departments and agencies, particularly the U.S. law enforcement have played in the investigation and seizure in criminal cases involving virtual assets.

Other countries that are specifically mentioned in the report include Italy, Norway, Sweden, Finland, Mexico and Japan.

V20 Summit

The Virtual Asset Service Providers summit is held from June 28th to 29th, parallel to the G20 summit in Osaka, Japan. The goal is to deliver a coordinated response to the guidelines and standards delivered by the FATF.

Attendees include industry leaders such as Coinbase, Bitcoin.com, Bitfinex, Huobi, Kraken, and bitFlyer.

The largest cryptocurrency exchange, Binance, is not represented at the V20 summit. Binance announced earlier last week that they will be releasing a Bitcoin backed Token, BTCB, on their native Binance Blockchain.

The summit is organized by the Australian Digital Commerce Association (ADCA) and by the Singapore Cryptocurrency and Blockchain Industry Association (ACCESS).

We will be updating you on the latest developments during the summit as they become available.

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Source: FATF Guidance for a risk-based approach

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