The third plenary of the Financial Action Task Force (FATF), held in Paris, found a lack of global adoption of the virtual asset recommendations established by the institution. According to evaluations, almost three-quarters of the jurisdictions are partially compliant or non-compliant with these recommendations.
FATF Plenary Calls To ‘Close Gaps’ in Global Regulation of Virtual Assets
The third plenary of the Financial Action Task Force (FATF), the global money-laundering watchdog, is calling to close the regulatory gaps in the compliance system of virtual assets. The meeting, held in Paris with the participation of more than 200 delegates, examined the adoption level of the recommendations of the institution regarding virtual assets and virtual assets service providers (VASPs).
According to reports and evaluations, almost three-quarters or more of the jurisdictions present were either partially compliant or just non-compliant with these recommendations. A FATF plenary publication declared:
Many jurisdictions have not yet implemented fundamental requirements, and more than half of survey respondents have not taken any steps towards implementing the travel rule, a key FATF requirement to prevent funds being transferred to sanctioned individuals or entities.
The travel rule, part of the FATF recommendations, involves collecting the identities of the sender and recipient of a transaction. Also, depending on a designated threshold, the institution recommends requiring more data. This recommendation, relatively new for VASPs, calls for the organization of a set of communication rules and cross-border data-sharing protocols among participants of the cryptocurrency industry.
The FATF plenary explained that this lack of compliance with the proposed recommendations opens loopholes for criminals to exploit and established the closure of these regulatory loopholes as an urgent priority. The institution will publish an upcoming report urging countries to implement its recommendations to avoid criminals taking advantage of these gaps.
The report, which will be published on June 27, will also highlight the risks of the activities of North Korea and the usage of virtual assets to finance its weapons of mass destruction program. The risks associated with decentralized finance activities and peer-to-peer transactions will also be addressed.
In May, FATF president Raja Kumar urged the countries of the Group of Seven (G7) to “lead by example” by implementing the FATF recommendations in their respective regulations “so that no safe havens exist for illicit crypto transactions.”
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