Category Archives: FATF

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35 Countries Advised to Review, Implement Banking-Like Regulations for Crypto


The FATF (Financial Action Task Force) in a recent assembly in France has called for tightening supervision over cryptocurrency exchanges in a way similar to commercial banks. The body advised all its 35 member countries to supervise the exchanges to prevent cryptocurrencies from being misused for unlawful transactions.

The new FATF guidelines are aimed at ensuring regulation and supervision of cryptocurrency service providers. The body has urged all its members to regulate cryptocurrency exchanges and associated transactions in the same way they regulate commercial banking institutions. The inter-governmental organization has made it obligatory for its member nations to adopt these changes, finalizing the necessary implementations for the supervision and regulation of virtual currency providers. These measures can be officially and formally adopted as a part of the FATF requisites from June.

To make effective use of the suggestions made by the FATF, member nations have to contemplate virtual assets and digital currency as “property”, “proceeds, “funds”, or other different “corresponding value”.

In addition, members will have to adopt relevant measures against virtual assets and their providers. They must now require virtual asset providers to realize and assess the potential terror financing and money laundering risks, and take effective actions to mitigate the same.

The FATF has established standards to promote effective implementation of the legal, regulatory and functioning measures for standing against money laundering, terrorist funding and other threats imposed on the integrity of the international finance system.

However, the taskforce has clarified that member nations need not establish a separate licensing or registration system for a person or persons who are already licensed and registered in this manner as financial institutions. These financial institutions already have obligations apart from the new suggestions, and hence they are permitted to accept crypto assets providers.


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Japan to Regulate Crypto Wallet Services

Japan’s Financial Services Agency (FSA) is planning to impose regulations on cryptocurrency wallet service providers, according to a published account of its latest meeting.

The agency gathered earlier this week for its ninth cryptocurrency study group meeting. The FSA also hosts regular study group meetings to discuss various crypto regulatory issues, particularly those concerning the regulation of cryptocurrency exchanges.

A major topic of its last meeting was a plan to regulate wallet service providers, given that currently, FSA regulations are not applicable to such services as such providers are not in the business of actually trading. The agency now feels that because such providers manage transfers and storage of digital currencies, they should be brought in line with financial regulation.

It was revealed that any new regulations would not apply to wallet software developers and hardware wallet manufacturers as these are often simply coded private facilities with no company backing.

The focus is again on money laundering and as such, Financial Action Task Force (FATF) regulations will become the basis for the new regulations according to the FSA. The FATF is an intergovernmental organization that designs and promotes policies and standards to combat financial crime. Recommendations created by the task force target money laundering, terrorist financing, and other threats to the global financial system.

Other issues discussed in this ninth meeting of the cryptocurrency study group around the topic of wallet services touched on stolen funds during cyber-attacks, wallet failures, money laundering, and other risks shared by crypto exchanges.

The FSA is continually updating its cryptocurrency regulations. At this last meeting, further measures to regulate the industry were discussed, such as financial audits and the separate management of funds belonging to service providers and customers. Also, it was suggested that during a transition period for introducing new wallet regulations service providers would not be able to add new businesses, customers, or coins supported by the wallet.


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FATF President Optimistic on Global Crypto Standards

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”.

Global standards

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.”

Earlier this year it had been reported that the FATF was preparing to review cryptocurrency activities and establish globally binding rules by 2019, which was requested by the G20 in March 2018.

Looking forward

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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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.

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

The draft reveals the regulations w