Finance Ministers from the world’s 20 most powerful economies have “…reaffirm(ed) (their) commitment to applying the recently amended FATF Standards to virtual assets and related providers for AML (anti-money laundering) and CFT (anti-terrorist finance),” in a communique issued from a meeting they held this weekend in Fukuoka, Japan.
Ministers from various government departments took part in focused ministerial meetings June 8th and 9th, just ahead of the general G20 Summit they will take part in Osaka on June 28th and 29th.
The FATF is an intergovernmental organization created in 1989 to combat, “…money-laundering and terrorist financing and other related threats to the integrity of the international financial system.”
No details regarding the amendments to the FATF’s “Public Statement – Mitigating Risks from Virtual Assets,” appear to be circulating publicly at this time.
The same document that was published by the FATF in February of this is year still appears to be featured on the FATF website.
In short, that documents calls for:
- countries applying a risk-based approach to the trading of crypto-assets and apply “rules commensurate” with the risks
- VASPs (Virtual Asset Service Providers) being registered and licensed in the jurisdictions where they originated
- VASPs being subject to “adequate regulation” and monitored to ensure they are conducting proper KYC/AML (customer identification/anti-money laundering) procedures
- regulatory staff being empowered to impose discipline on non-compliant VASPs, including the withdrawal of licenses
- countries acting, “…rapidly, constructively, and effectively provide the widest possible range of international cooperation in relation to money laundering, predicate offences, and terrorist financing relating to virtual assets.”
- countries, “…ensur(ing) that beneficiary VASPs obtain and hold required originator information and required and accurate beneficiary information on virtual asset transfers, and make it available on request to appropriate authorities.”
In response to the FATF directives, representatives from the Crypto Valley Association (headquartered in Zug, Switzerland) asked that the proposed FATF rules governing VASPs be nuanced, and that, “The definition of Virtual Assets should not be broadened…The term VASPs and custodial services…be clearly defined…(and that the FATF)…allow alternative means of identity validation…” among other things.
To advocate for the industry, VASPSs are holding their own concurrent “V20” meeting in Osaka at the end of June in order,“…to deliver a coordinated response to the updated standards proposed by the Financial Action Task Force (FATF).”
According to V20 organizers, “V20 Proposals” to the FATF include:
- A round table summit of government agencies, crypto companies, and FATF representatives at the G20 Summit in Osaka
- Regulation proposed by the industry reflecting the unique nature of virtual assets to influence the FATF proposal.
- An extension of the timeline for the updated FATF standards to come into effect.
- Development of protocols and standards to underpin a platform to meet the information collection requirements of FATF.
The V20 Summit is by invitation only.
The communique from G20 Finance Ministers acknowledges that, “Technological innovations, including those underlying crypto-assets, can deliver significant benefits to the financial system and the broader economy.”
Crypto-assets are also not seen as posing a danger to global stability currently, though risks are also acknowledged:
“While crypto-assets do not pose a threat to global financial stability at this point, we remain vigilant to risks, including those related to consumer and investor protection, anti-money laundering (AML) and countering the financing of terrorism (CFT).”
By all appearances, the amended FATF guidelines will be adopted at the G20 at the end of June:
“We look forward to the adoption of the FATF Interpretive Note and Guidance by the FATF at its plenary later this month.”
The ministers also called on other relevant regulatory bodies to report on enhancing protections in the crypto sector and on how industry perspectives can be incorporated:
“We welcome IOSCO’s work on crypto-asset trading platforms related to consumer and investor protection and market integrity. We welcome the FSB’s directory of crypto-asset regulators, and its report on work underway, regulatory approaches and potential gaps relating to crypto-assets. We ask the FSB and standard setting bodies to monitor risks and consider work on additional multilateral responses as needed. We also welcome the FSB report on decentralized financial technologies, and the possible implications for financial stability, regulation and governance, and how regulators can enhance the dialogue with a wider group of stakeholders.”