TL;DR: The Financial Action Task Force on Money Laundering (FATF) met with “representatives from the 205 members of the FATF Global Network, the IMF, UN, World Bank” in Orlando, Florida. The six days of meetings included “key issues” such as crafting an interpretive “note and guidance on virtual assets,” which appeared at the top of their to-do list. Released documents show a new emphasis on monitoring cryptocurrency exchanges and coin mixing services.
Financial Action Task Force Targets Coin Mixers and Exchanges With New Regulations
The Financial Action Task Force is an intergovernmental organization that gathered considerable steam after 2001 and the advent of developed countries’ global war on terror. So-called terrorism financing gave birth to a host of concerns about strengthening anti-money laundering laws (AML) and know-your-customer regulations (KYC). As such, the FAFT monitors progress worldwide on these fronts mostly in a non-binding fashion.
The meeting in Orlando was in large measure a follow up from their Paris session back in late February of this year. Then, they released Mitigating Risks from Virtual Assets, “Recognising the need to adequately mitigate the money laundering (ML) and terrorist financing (TF) risks associated with virtual asset activities, the FATF is setting out more detailed implementation requirements for effective regulation and supervision/monitoring of virtual asset services providers [(VASPs)].”
This week, a top priority of more than three dozen member nations was to tackle “virtual assets,” both cryptocurrency exchanges and coin mixing services. VASPs, which include exchanges, will be required to communicate between themselves with regard to user information when funds are shuttled in either direction. Name, account number, wallet, address, national identification numbers must be shared. VASPs will have almost exactly a year to implement such procedures.
Nearly all of the above was expected. The difference in this particular session was an acknowledgment of coin mixing services. On page 28 (note 110) of its newly published, GUIDANCE FOR A RISK-BASED APPROACH TO VIRTUAL ASSETS AND VIRTUAL ASSET SERVICE PROVIDERS, the language reads, “In the context of [virtual assets (VA)] and VASP activities, countries should ensure that VASPs licensed by or operating in their jurisdiction consider whether the VASP can manage and mitigate the risks of engaging in activities that involve the use of anonymity-enhancing technologies or mechanisms, including but not limited to AECs, mixers, tumblers, and other technologies that obfuscate the identity of the sender, recipient, holder, or beneficial owner of a VA. If the VASP cannot manage and mitigate the risks posed by engaging in such activities, then the VASP should not be permitted to engage in such activities.”
DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.
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