FATF Releases Action Plan to Improve Implementation of Global Standards on Crypto

According to a study published by the Financial Action Task Force, often known as FATF, its delegates have reached a consensus on an action plan “to encourage prompt worldwide implementation” of global standards on cryptocurrencies.

According to a publication that was released on February 24 by the Financial Action Task Force (FATF), the plenary for the financial watchdog, which is comprised of delegates from more than 200 jurisdictions, recently met in Paris and reached a consensus on a roadmap that is intended to strengthen the “implementation of FATF Standards on virtual assets and virtual asset service providers.” The task force has said that it would provide a report on how FATF members have progressed in implementing the crypto standards in 2024. This study will include topics such as the regulation and monitoring of VASPs.

According to the findings of the research, “the absence of regulation of virtual assets in many nations presents possibilities that are used by criminals and terrorist financiers.” “Since the FATF strengthened its Recommendation 15 in October 2018 to address virtual assets and virtual asset service providers, many countries have failed to implement these revised requirements,” the Financial Action Task Force (FATF) writes. “This includes the ‘travel rule,’ which requires obtaining, holding, and transmitting originator and beneficiary information relating to virtual asset transactions.”

The “Travel Rule” established by the FATF contains a section that recommends virtual asset service providers (VASPs), financial institutions, and regulated organizations in member states gather information on the originators and beneficiaries of certain digital currency transactions. The financial watchdog said that as of April 2022, several nations were not in accordance with its requirements for combating the financing of terrorism and anti-money laundering.

The nations of Japan, South Korea, and Singapore have been among those that have shown the most willingness to put policies in place that are in line with the Travel Rule. According to reports, a number of countries, including Iran and North Korea, have been added to the “grey list” maintained by the FATF in order to monitor potentially illicit financial activities.


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Crypto Service Providers Willing to Embrace FATF Travel Rule, Study Shows

The Travel Rule, which now governs service providers in the digital currency ecosystem, is arguably not a source of concern as a new report from Notabene shows many firms in the space are in compliance already.

Per the report, which surveyed 56 businesses across North America, Asia Pacific, Europe, Africa, and the Middle East, as many as 70% of businesses are either practising the rule or planning to complete their compliance in Q1/Q2 2022. 

The Travel Rule demands businesses involved in cash or money transfers to report funds transactions of $1,000 and above to authorities, a move that is expected to curb money laundering and terrorist financing. With the emergence of Bitcoin (BTC) and altcoins, the Financial Action Task Force (FATF), an international watchdog responsible for developing the rule, has published guidelines and revisions to fit the evolution in the nascent digital currency ecosystem.

Per the Notabene report, about one-third of firms (31%) completely or partially adhere to the regulation. The report also revealed that 92% of respondents have internal compliance and legal departments, and 78% of these businesses consider these teams able to guarantee the company acts in accordance with external rules and internal controls.

In all, crypto-assets service providers are shown to be in broad compliance with many who have no technical expertise to implement the rules exploring other protocols that can be adopted. 

Many critics have often dwelled on how cryptocurrency exchanges and other service providers have backed illegal use of Bitcoin and other coins with pseudo-anonymous provisions. However, platforms like Coinbase Global Inc, Binance, and Huobi have notably implemented transaction monitoring tools, a move that suggests players in the digital assets ecosystem are not anti-regulation.

From Notabene’s report, the broad compliance of players in the space to the Travel Rule can help them become active partners in shaping the future of the crypto payment industry.

Image source: Shutterstock


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South Korean crypto exchanges to follow Coinone in verifying private wallets

Major South Korean crypto exchanges including Upbit, Bithumb and Korbit will follow Coinone’s lead in banning transfers to non-verified wallets, industry analysts say. 

Yesterday Coinone announced that it would reject deposits from unverified private wallets starting Jan. 24 to reduce the risk of money laundering. All Korean exchanges, including Upbit, Bithumb, Korbit and 20 others, are expected to implement similar or identical measures as Coinone by or before March 25. The Korean government set the deadline for exchanges to track coin transactions on and off their platforms accurately.

Korean blockchain industry analyst Jun Hyuk Ahn told Cointelegraph, “Korean exchanges are creating their own Travel Rule solutions in order to meet the requirements to operate post-March.”

“All the Korean exchanges are going to have to use some travel rule system by March because that’s when the government has set a deadline for them. Coinone just did it first.”

The rule for exchanges will also help the far eastern nation come into compliance with the Financial Action Task Force (FATF) “travel rule.”

According to anti-money laundering (AML) Compliance service Sygna, the travel rule stipulates that national governments must “ensure domestic exchanges share real-identity information with transmittal counterparties or face increased AML/CFT monitoring.”

These compliance stipulations for exchanges are part of a long series of regulatory restrictions for crypto exchanges which started with the real-name bank account requirement for all users. Before that rule was implemented in 2018, crypto exchange accounts could be linked to a bank account owned by multiple individuals.

By Sep. 2021, exchanges were required to have Internet Security Management System (ISMS) verification and a single domestic bank partner which would issue real-name accounts. All exchanges that could not meet the requirements were forced to remove KRW pairs from trading or suspend services altogether.

Related: Binance Turkey fined 8M lira for non-compliance against money laundering

The country has grappled with global FATF compliance issues related to nonfungible tokens (NFT) as well. Financial regulators flip-flopped on their policy direction regarding NFTs until the latest statement from the Financial Services Commission stated on Nov. 24 that it would explore its options to regulate and tax NFTs.

Globally, South Korea’s exchanges are the outliers in complying with the rule. As of now, there are no other major crypto spot exchanges that require users to verify their private wallets.