Category Archives: FATF

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Financial Action Task Force to Create Binding Crypto Rules for G20 Nations

The Financial Action Task Force (FATF) is going to announce its new rules for cryptocurrency in June 2018. In March 2018, the G20 said they looked forward to the FATF’s review of cryptocurrency activity and committed to implement the cryptocurrency standards the FATF decides upon, and call upon the FATF to advance global adoption of cryptocurrency.

A Japanese official said the FATF would begin its cryptocurrency discussion and rule-making session on 24 June 2018. The hope is to have binding rules for cryptocurrency exchanges in place no later than 2019, in order to reduce money laundering and terrorism financing that is being facilitated with cryptocurrency.

The rules announced by FATF will have wide-reaching implications for cryptocurrency markets and activity, since the G20 includes representatives from the governments and central banks of the most powerful and industrialized economies on the planet including the United States, European Union, United Kingdom, Russia, South Korea, South Africa, Saudi Arabia, Mexico, Japan, India, Indonesia, Turkey, China, Canada, Brazil, Argentina and Australia.

In 2015, FATF released a 48-page document to give member nations guidance on how to treat cryptocurrency in order to reduce money laundering, including registering cryptocurrency exchanges, collecting identification information of exchange users, and reporting suspicious activity. However, this guidance was non-binding, and it was left up to each nation’s discretion on what they should do to handle cryptocurrency activity.

FATF will analyze the effectiveness of the 2015 guidelines, discuss how to improve the guidelines especially when considering new technology that has been developed in the meantime, and how to deal with nations like India and China that have outright banned cryptocurrency trading.

IT could get China and India to legalize cryptocurrency trading according to new binding guidelines. Japan hopes to lead the creation of these new cryptocurrency rules issued by FATF and has been very positive towards cryptocurrency. Japan will take leadership of the G20 in 2020.

 

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Canadian Draft Law Requires Crypto Exchanges to Report “Large Virtual Currency Transactions”

In Canada, an official draft of new regulations on crypto exchanges and payment processors has been released by the government, says a Canada Gazette reports.

The draft will tackle areas identified by a 2015-16 Financial Action Task Force (FATF) evaluation, principally strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime (AML/ATF). The FATF is an intergovernmental organization that develops policies to combat money laundering.

New regulations will treat crypto exchanges and payment processors as money service businesses (MSB), which requires them to report transactions over CAD 10,000 Canadian dollars (USD 7,700). The new Know Your Customer (KYC) procedures will now have a threshold set at CAD 1,000 CAD (USD 770).

Canada’s move towards further cryptocurrency regulation and transparency reflect the growing trend with governments around the world to tighten the regulatory grip on the industry as a whole. The US Securities and Exchanges Commission (SEC) has been particularly active this year in tracking down and prosecuting fraudulent cryptocurrency exchange activity, according to Bitcoin News.

Francis Pouliot, co-founder of Montreal-based blockchain consulting firm Catallaxy, was particularly unhappy with current developments, and tweeted his response to the latest draft.

New requirement: “Large Virtual Currency Transaction Record” means businesses required to ask for and keep details of every transaction over $10,000, like large-cash transaction reports. That’s going to be extremely difficult and invasive to implement. I will object to this. pic.twitter.com/PdabH0uGj4

— Francis Pouliot ⚡ (@francispouliot_) June 8, 2018

The draft reveals the regulations would cost about CAD 61 million (USD 47 million) over the next ten years, with the Canadian government maintaining that implementing these regulations will have a positive impact on the country’s international reputation.

This year, Canada’s first blockchain exchange-traded fund began trading on the Toronto Stock Exchange and the Bank of Canada piloted a research program to examine the possibility of a national cryptocurrency.

Canada has been referred to as one of the most transparent countries globally when it comes to understanding laws surrounding the digital currency industry, aside from Switzerland, which reportedly wants to be “THE crypto-nation”.

 

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G20 Call for Examination of Cryptocurrencies

Following last week’s G20 meeting of member states in Buenos Aires and the declaration that cryptocurrencies need to be “examined”, this revelation was greeted with some media skepticism.

Marc Hochstein, the managing editor of Coindesk, clearly views such statements as simply demonstrating the protracted nature of any decisions proposed by the member states, suggesting their actions amounted to yet another delaying tactic. “Let’s form a committee to explore the formation of an exploratory committee,” he mused.

The G20 did agree that an examination was needed but before this could happen more information about digital currencies and their place in the world was needed before any regulations could be proposed. Notable is the fact that members cannot set policy for sovereign nations, being limited only to making recommendations. A further hurdle to any serious discussions regarding cryptocurrencies is the fact that some of the more outspoken proponents of blockchain technology are not members of the G20 alliance itself.

If a successful global policy to accept blockchain technologies through international cooperation were possible it isn’t helped by the current threat of resurgent nationalism around the globe, argues Hochstein.

John Collins, former head of policy for cryptocurrency exchange Coinbase, suggests that another hurdle to overcome is the fact that cryptocurrency is inconsistent with nationalistic ideas as it is clearly a system which is not bound by national borders. He cites the Financial Action Task Force (FATF) as at least one system which is actually working towards international cooperation. The body, which is responsible for blacklisting non-cooperative counties involved in sanctioning money-laundering, has been cited by the G20 as a possible way of implementing standards as they might apply to cryptocurrency, but at this time FATF standards do not apply to digital currency.

Collins suggests that there are strong business models around the globe such as the USA and Japan, countries which have boosted user confidence in using cryptocurrencies through developing systems which offer “regulatory clarity”.

It remains to see what developments arise after the G20’s deadline for July of this year where leaders propose to examine recommendations on what data is needed.

 

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Jon Matonis – The Fincen Whistleblowers

Jon Matonis – The Fincen Whistleblowers:

Bitcoin Foundation board member Jon Matonis (@JonMatonis) writes a post on how the financial surveillance also occurring is no secret.  Excerpts:  

“The Fincen bureau conducts all of its surveillance activity out in the open and in plain sight, probably for its effect as a deterrent. Fincen even recruits banks and other agent financial institutions to participate in the direct surveillance that make serious and consequential judgment calls along the way.”

“Two generations of educated Americans, including some smart attorneys, have been conditioned to think of money laundering as a real and legitimate category of crime. Eradication of privacy is the goal and manipulation of the semantic crime debate is the tool.”

“Since the available cryptography and technical tools of today permit near absolutes on each side of the privacy-surveillance spectrum, each advancement from one side elicits an equally strong reaction from the other side.”

“As shameful as the existence of PRISM is, and it is monumentally shameful for a free society, it doesn’t even compare to the unprecedented level of financial surveillance the world is on the verge of witnessing.”

“Digital currencies with proper mixing services such as bitcoin become a viable option for preserving some transactional privacy, even if identification is required for its initial acquisition from licensed money transmitters.”

“A world where privacy isn’t sacrificed and all human transactions aren’t tracked is not only possible, but imperative. The alternative will be far worse than you can imagine.”

 – http://bit.ly/1anVlwV
 – http://bitcointalk.org/index.php?topic=236621.0 (Further discussion of the article)

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