The president of the Financial Action Task Force (FATF) is positive that a global Anti-Money Laundering (AML) standard for cryptocurrencies will be soon be finalized.
Speaking with the Financial Times, FATF president Marshall Billinglsea believes that digital assets present a “great opportunity”, although a lack of concrete AML standards has resulted in the adoption of AML being a “patchwork quilt or spotty process”.
As a result, he says that international and national financial systems are at risk from “significant vulnerabilities”.
Recently described as a “Wild West” by the UK Treasury Committee, governments are acknowledging that the crypto-asset markets are need of regulation. In a report, the committee echoed the concerns of held by many governments with regards to consumer protections, and at a minimum should give focus to that as well as AML.
Billingslea has said that a FATF meeting in October will see the global AML task force decide upon suitable standards, closing AML “gaps” across the world. He added, “It is essential that we establish a global set of standards that are applied in a uniform manner.”
In 2014 the FATF released the ‘Virtual Currencies Key Definitions and Potential AML/CFT Risks‘ report, which brought to light the growing popularity of virtual currencies and future implications. Drawing few conclusions, the paper was observational and educational primarily but put vital discussions into motion.
2015 saw the FATF release another report titled ‘Guidance For A Risk-Based Approach – Virtual Currencies‘. This served to further discussions and establish some strategy for countering AML and financing of terrorism (CFT).
It recommended that “all jurisdictions to impose specified AML/CFT requirements on financial institutions and designated non-financial businesses and professions (DNFBP) and to ensure their compliance with those obligations”.
In the FT interview, Billingslea described concerns pertaining to cryptocurrencies being used by terrorist organizations, also citing cyber-attack extortion schemes such as WannaCry as an area to be addressed.
The new rules that are intended for release this year would be an upgrade to the non-binding rules that had been approved in 2015. In October, the FATF will discuss which specific standards and rules need updating, as present ones do not officially acknowledge them.
Billingslea argues that regulations “can’t tilt too far in one direction or another” as blockchain technologies will “continue to evolve””, revealing a long-term vision for the FATF in relation to the nascent tech.
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