The FATF (Financial Action Task Force) has just concluded its third Plenary under the Presidency of T. Raja Kumar of Singapore and has posted an update on the gathering.
Amongst other hot topics, the group has bemoaned the slow pace of adoption of the FATF travel rule for crypto transactions or Virtual Assets/VASPs (virtual asset service providers). The FATF has complained about the slow adoption in the past.
According to the group, four years after the FATF announced new standards for virtual asset transactions and virtual asset service providers, global implementation of these measures remains relatively poor.
“Based on FATF mutual evaluation and follow-up reports, almost three quarters of jurisdictions are only partially compliant or not compliant with the FATF’s requirements. Many jurisdictions have not yet implemented fundamental requirements, and more than half of survey respondents have not taken any steps towards implementing the Travel Rule, a key FATF requirement to prevent funds being transferred to sanctioned individuals or entities. This lack of regulation creates significant loopholes for criminals to exploit. Closing the gaps in global regulation of virtual assets is an urgent priority. The FATF calls on all countries to apply the AML/CFT rules to virtual assets service providers, without further delay.”
Later this month, FATF expects to public a report urging the adoption of its recommendations for crypto to “close these loopholes.”
The report will also address the abuse of crypto, including activity by North Korea, which apparently utilizes digital assets to help to fund its weapons of mass destruction.
As it attempts to shame countries into compliance, in 2024, FATF will publish a list of member jurisdictions adhering to the rules along with those members ignoring the requests.