Crypto a Key Focus of FATF Report to G20

FATF is actively monitoring crypto assets for AML/CTF risks and is reviewing its guidance and standards to determine if changes are needed to reflect their technical aspects.

The FATF (Financial Action Task Force) has issued a report to G20 Finance Ministers and Central Bank Governors setting out its ongoing work to fight money laundering and terrorist financing.

One of the report’s key focus areas is the FATF’s work programme on virtual currencies/crypto assets, noting their increasing use for money laundering and terrorist financing. The FATF is actively monitoring the risks associated with virtual currency/crypto-asset payment products and services, including pre-paid cards linked to virtual currencies, Bitcoin ATMs, and ICOs (initial coin offerings).

The FATF also conducted a stocktake to identify the different regulatory approaches among G20 participants and other countries, saying that rapid change in the regulatory environment makes it challenging to ensure a consistent global approach.

In June 2018, the FATF begin a review of its guidance and standards to determine if changes are necessary to clarify their application to virtual currencies/crypto assets and promote a more consistent approach. The task force plans to hold an intersessional meeting in September on how FATF standards might apply to virtual currency providers and related businesses, including for customer due diligence, fund transfers, supervision, and enforcement. The FATF will update the G20 on this in October 2018.

The report also covered the FATF’s efforts to improve transparency and the availability of beneficial ownership information. It separately published another report with Egmont Group entitled “Concealment of Beneficial Ownership”, which draws upon case studies to identify the methods being used to hide beneficial ownership and analyse vulnerabilities, with a focus on the involvement of professional intermediaries. This report highlights the importance of ensuring competent authorities have access to adequate, accurate and timely information on the beneficial ownership and control of legal persons, and arrangements including express trusts.

Another report published by the FATF focuses on improving the effectiveness of the criminal justice system in the investigation and prosecution of money laundering and terrorist financing, and in the recovery of the proceeds of crime. It highlights useful elements and best practices in the conduct of investigations, prosecutions, convictions and confiscation. Given the transnational nature of many criminal networks, the report also highlights the need for international cooperation.

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