FATF recommendations announced! The Financial Action Task Force (FATF) has announced its final recommendations on regulating crypto currencies for the 37 countries who participate in the FATF.
The FATF released a requirement that “virtual asset service providers” (VASPs) including crypto exchanges, share information about their customers to one another when transferring funds between one another.
The final recommendationmakes official the contentious part of FATF’s February’s statement, when they said that countries should make sure that when crypto businesses send money, they:
“… obtain and hold required and accurate originator [sender] information and required beneficiary [receipient] information and submit the information to beneficiary institutions … if any. Further, countries should ensure that beneficiary institutions … obtain and hold required (not necessarily accurate) originator information and required and accurate beneficiary information …”
Under the new guidance, the required information for each transfer includes:
- (i) originator’s name (i.e., the sending customer);
- (ii) originator’s account number where such an account is used to process the transaction (e.g., the VA wallet);
- (iii) originator’s physical (geographical) address, or national identity number, or customer identification number (i.e., not a transaction number) that uniquely identifies the originator to the ordering institution, or date and place of birth;
- (iv) beneficiary’s name; and
- (v) beneficiary account number where such an account is used to process the transaction (e.g., the VA wallet).
The FATF says that the threat of criminal and terrorist misuse of virtual assets is serious and urgent enough to warrant this response. The FATF will give countries 12 months to comply and adopt, with a review set for June of 2020, next year.
The FATF’s guidelines also suggest that individuals using crypto wallets to transmit tokens could also be designated as VASPs. This would require them to be subject to licensing requirements.
“In cases where the VASP is a natural person, it should be required to be licensed or registered in the jurisdiction where its place of business is located—the determination of which may include several factors for consideration by countries,” the document says.
The FATF clarified by saying that individuals who use crypto to buy goods or services or transfer money in a one-off situation does not make them a VASP. They’re also giving countries the option of requiring foreign VASPs that provide products or services within their borders to register with the proper authorities, therefore “respecting” sovereignty.
“Competent authorities should take the necessary legal or regulatory measures to prevent criminals or their associates from holding, or being the beneficial owner of, a significant or controlling interest, or holding a management function in, a VASP,” the guidance states elsewhere.
“Such measures should include requiring VASPs to seek authorities’ prior approval for substantive changes in shareholders, business operations, and structures,” it adds.
Many, like ChainAnalysis, believe that instead of transparency, this will shut down legitimate crypto exchanges and the possibility of more subterfuge is possible. Legitimate means of tracking, many are afraid, will cease.
Despite the concerns, the FATF, lead by the United States, forged ahead in meetings in Vienna last month. 300 attendees participated.
“By adopting the standards and guidelines agreed to this week, the FATF will make sure that virtual asset service providers do not operate in the dark shadows,” U.S. Treasury Secretary Steven Mnuchin said in remarks to the FATF plenary session held Friday in Orlando, Florida.
This will help the fintech sector “stay one step ahead of rogue regimes and sympathizers of illicit causes,” he said, adding:
“We will not allow cryptocurrency to become the equivalent of secret numbered accounts [and] we will allow for proper use, but we will not tolerate the continued use for illicit activities.”
FATF recommendations are not binding – these recommendations regarding crypto currencies must first pass via the participating country’s legislative body and then signed by the executive. However, countries that fail to comply with FATF standards puts them on a blacklist. This typically means that they won’t see foreign investment.
The FATF recommendations come right before the G20 summit, where the twenty top economies in the world will meet, and no doubt discuss a variety of topics – it can be certain crypto currency will be one of them.
What do you think? The worldview and plan of the FATF is precisely what Crypto was designed to break. What do you think Crypto technology will do in response to these draconian recommendations? Let us know on our Facebook Page!
