TL;DR: When the Financial Action Task Force on Money Laundering (FATF) met for six days last week in Orlando, Florida, the international regulatory body had at the top of its agenda dealing with cryptocurrencies. In addition to published documents, United States Secretary of the Treasury, Steven T. Mnuchin, doubled down on their efforts during prepared remarks. He was especially concerned about transaction privacy and using cryptocurrency for “illicit activity.”
Treasury Secretary Mnuchin Doubles Down on FATF Crypto Regulations
Secretary Mnuchin began by lauding FATF work, pointing out among their efforts how one “of the most valuable contributions of this plenary is the regulation of all virtual assets, especially cryptocurrencies. I commend efforts by the FATF to address the growing misuse of cryptocurrencies and other virtual assets by money launderers, terrorist financiers, and other illicit actors.”
Cryptocurrency enthusiasts are slowly becoming acquainted with the body, which boasts representatives from its global network, including the International Monetary Fund, United Nations, and World Bank. It’s important to understand guidelines FAFT produces are just that, non-binding. But considering the agency’s elbow and shoulder rubbing with the most important financial regulators in the world, what they produce will surely have weighted influence over governments’ policies.
Mnuchin continued by restating key points from its document, GUIDANCE FOR A RISK-BASED APPROACH TO VIRTUAL ASSETS AND VIRTUAL ASSET SERVICE PROVIDERS. Greater scrutiny between exchanges and custodial services who handle cryptocurrencies is being demanded, with particular emphasis on identity (know-your-customer laws, anti-money laundering laws).
We Will Not Allow Cryptocurrency to Become the Equivalent of Secret Numbered Accounts
His remarks differed only slightly from the formal documents produced. He placed a spotlight upon what measures the United States in particular hopes to take. “By adopting the standards and guidelines agreed to this week,” Mnuchin explained, “the FATF will make sure that virtual asset service providers do not operate in the dark shadows. This will enable the emerging FinTech sector to stay one-step ahead of rogue regimes and sympathizers of illicit causes searching for avenues to raise and transfer funds without detection.”
In this regard, “We will not allow cryptocurrency to become the equivalent of secret numbered accounts,” he stressed. “We will allow for proper use, but we will not tolerate the continued use for illicit activities. In the U.S., I have convened a working group with the Federal Reserve and other regulators to make sure we keep the use of digital assets for legitimate use only. I encourage you to do the same in your markets.”
Secretary Mnuchin was appointed by President Trump in early 2017, and hails from what amounts to as the pinnacle of American finance. A former hedge fund manager, he worked for Goldman Sachs for nearly two decades. Later, he would be part of the US retail establishment, sitting on boards at Kmart and Sears. He also at one time owned a bank, IndyMac/OneWest Bank, eventually selling it to CIT Group.
DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.
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