The Financial Action Task Force (FATF), an inter-governmental body that promotes implementation of measures for combating money laundering, says that cryptocurrency firms will be subjected to rules to prevent the abuse of digital coins such as bitcoin for money laundering.
FATF, which groups countries from the United States to China and bodies such as the European Commission, said countries are required to assess and mitigate their risks associated with virtual asset activities and service providers; license or register service providers and subject them to supervision or monitoring by competent national authorities—(notably, countries will not be permitted to rely on a self-regulatory body for supervision or monitoring)—and implement sanctions and other enforcement measures when service providers fail to comply with their AML/CFT obligations; and underscore the importance of international cooperation. FATF said that some countries may decide to prohibit virtual asset activities based on their own assessment of the risks and regulatory context, or to support other policy goals.
Further, FATF requires countries to ensure that service providers also assess and mitigate their money laundering and terrorist financing risks and implement the full range of AML/CFT preventive measures, including customer due diligence, record-keeping, suspicious transaction reporting, and screening all transactions for compliance with targeted financial sanctions, among other measures, just like other entities subject to AML/CFT regulation. This includes coordination with relevant authorities.
"The threat of criminal and terrorist misuse of virtual assets is serious and urgent, and the FATF expects all countries to take prompt action to implement the FATF recommendations in the context of virtual asset activities and service providers," FATF said at a Plenary meeting in Orlando on 21 June 2019.
The FATF will monitor implementation of the new requirements by countries and service providers and conduct a 12-month review in June 2020.
The FATF initiative marks the first attempt to establish a global approach in regulating the $300 billion coin trading market, supplementing a current patchwork ranging from Japan’s move to license exchanges to an outright ban in China.
Finance Ministers and Central Bank Governors at the G20 meeting in Fukuoka welcomed and expressed their support for the FATF’s actions on the regulation and oversight of virtual assets and virtual asset service providers.