International Financial Action Task Force (FATF) Presents Travel Rule for Cryptocurrencies to Combat Financial Misdeeds
The Financial Action Task Force (FATF), an organisation under the United Nations, is set to release a significant report that aims to combat money laundering and terrorism financing in the crypto space. The report, scheduled for release on an unspecified date, follows a series of meetings held by the organisation at its headquarters in Paris.
The FATF's call to action stems from concerns about criminals exploiting unregulated areas in the crypto space. The report will delve into the examination of "emerging risks" such as stablecoins, decentralized finance, non-fungible tokens, and peer-to-peer transactions, shedding light on their illicit activities.
The FATF travel rule, initially introduced in June 2019 and undergoing its latest revision in June 2022, will also be a key focus of the report. The rule requires virtual asset service providers (VASPs) to pass on certain customer information during transfers of virtual assets. However, the FATF has expressed concern over the lack of implementation of the travel rule by numerous member states.
Out of 98 jurisdictions evaluated in a FATF survey conducted in March 2022, only 29 had met the necessary criteria outlined in the travel rules. Moreover, more than half of survey respondents have not taken any steps towards implementing the Travel Rule, as per a FATF survey.
The forthcoming report will also discuss other risks associated with the crypto space, including the illicit virtual asset activities conducted by North Korea, allegedly involving the channeling of stolen funds into its Weapons of Mass Destruction program.
In an effort to effectively address and eliminate the existing vulnerabilities that criminals seek to exploit, the FATF has reiterated its appeal for nations to adopt the travel rule to combat money laundering and terrorism financing involving cryptocurrencies. The countries mentioned in the FATF report for implementing the Travel Rule in combating money laundering and terrorism financing related to cryptocurrency transactions include the United States, Canada, Japan, South Korea, Singapore, and the European Union member states.
On June 27, the FATF announced its intention to release a report that emphasizes the importance of member countries adhering to its recommendations. The objective of implementing these recommendations is to strengthen the global response to the threats posed by illicit activities in the crypto space. The FATF's forthcoming report is expected to provide guidance on addressing these emerging risks and illicit activities.
The FATF's efforts to combat money laundering and terrorism financing in the crypto space are a significant development in its ongoing mission. A limited number of the jurisdictions that met the criteria had commenced enforcement efforts, indicating a need for more countries to take action against these illicit activities. The FATF's forthcoming report will undoubtedly provide valuable insights and guidance for nations seeking to strengthen their defences against money laundering and terrorism financing in the crypto space.
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