Editors Note: This article comes fromCarbon chain value (ID: cc-value)Editors Note: This article comes from
Carbon chain value (ID: cc-value)
Carbon chain value (ID: cc-value)
, Author: Noni, translation: Bai Ye, reproduced by Odaily with authorization.
On June 24, 2020, Liu Xiangmin, the rotating chairman of the Anti-Money Laundering Financial Action Task Force (FATF) and former director of the Central Banks Treaty and Law Department, hosted the third and final plenary meeting, and made it clear that virtual assets and virtual asset service providers ( VASP) to implement new anti-money laundering guidelines. Today, the revised FATF standards for virtual assets and virtual asset service providers have been implemented for more than a year. Actively developing a Travel Rule solution - these moves have also made many see the promise and hope that new regulatory standards can bring to virtual asset service providers and the wider cryptocurrency community.
Here, let us evaluate and analyze the effect of the new standard twelve months after its implementation.
The analysis for this assessment will focus on three main areas:
1. Emerging market trends and money laundering risks;
3. The development of the private sector and the status of the adoption of data transfer rules (Travel Rule) compliance mechanisms.
In fact, the public and private sectors have responded positively to the new regulatory standards of the Financial Action Task Force on Money Laundering, which is also aware of the global implementation of regulations related to virtual assets and virtual asset service providers. Guidelines have progressed. Especially in the past year, virtual asset service providers have actively developed solutions to support data transfer rules (Travel Rule). It is very important to have a supporting regulatory system and compliance mechanism.
At this stage, the Financial Action Task Force on Anti-Money Laundering has decided not to revise its previous regulatory recommendations on virtual assets or virtual asset service providers, but will continue to provide guidance in this area in the future. The next head of the Financial Action Task Force on Anti-Money Laundering will be German Marcus Pleyer. Regulatory guidance for virtual asset service providers.
secondary title
1. Emerging market development trends and money laundering types: the dilemma of privacy coins
Consistent with previous assessments, the overall amount of criminal activity involving virtual assets has decreased, but the majority of existing criminal activity still involves one type of virtual asset: privacy coins. In terms of criminal activity, the most common are drug-related crimes, but also some other fraudulent crimes such as investment scams, racketeering and extortion.
At present, the risks in the virtual asset market mainly come from two loopholes:
1. Operating virtual asset service providers in unregulated jurisdictions;
2. Use anonymous trading tools.
The Financial Action Task Force on Money Laundering has noted that the use of DNS registers can block or delete information on the true owners of domain names, mixers, and privacy coins, an issue that has raised concerns among regulators about money laundering and terrorism financing. We know that virtual asset transactions are real-time and cross-border. However, if combined with anonymity, it will undoubtedly arouse the interest of professional money laundering networks. They will use virtual assets to layer filter illegal funds and conceal their sources. The Financial Action Task Force on Money Laundering specifically cited concerns about certain virtual asset service providers who fail to implement appropriate controls to mitigate the risks associated with anonymous virtual assets.
In some jurisdictions that have established regulatory regimes for virtual assets and virtual asset service providers, the number of violations has increased in the past twelve months, such as:
2. Violation of transaction record keeping requirements;
3. Non-compliance or violation of the reporting mechanism.
It should be noted that the Financial Action Task Force on Anti-Money Laundering does not impose mandatory requirements on jurisdictions to implement and enforce its regulatory standards (usually relying on jurisdictions to implement and implement voluntarily), and the 12-month period is relatively limited, so It is not yet possible to accurately assess the effects of the new regulatory framework introduced last year and any new trends.
secondary title
2. Public Sector: Governments Enforce Anti-Money Laundering and Anti-Terrorism Financing Regulations on Cryptocurrencies
Through the self-assessment, the governments public sector has given clear direction on the adoption and implementation of FATFs revised virtual asset regulatory standards. Among FATF member countries and regional organizations, 54 jurisdictions responded with regulatory standards for virtual assets, of which:
1. 32 jurisdictions report having implemented existing AML/CFT regulations for virtual asset service providers;
2. Thirteen jurisdictions report that they are developing anti-money laundering/counter-terrorism financing regulations for virtual asset service providers;
3. Five jurisdictions report that virtual asset service providers will be prohibited or may be prohibited from conducting business in the future.
The assessment found that of the 32 jurisdictions that have established AML/CFT regulations for virtual asset service providers, 30 have established licensing or registration systems, and 18 have suggested that the scope of their regulations can be extended to overseas A virtual asset service provider that is registered and provides products or services to customers in its jurisdiction.
Across the 30 jurisdictions that have established licensing or registration regimes for virtual asset service providers, registrations are roughly as follows:
1. The number of virtual asset service providers registered in most jurisdictions is less than 10;
2. The number of virtual asset service providers registered in a few jurisdictions exceeds 100;
3. Only 20 jurisdictions report more than 1,000 locally registered virtual asset service providers.
The Financial Action Task Force on Anti-Money Laundering believes that there is a need for further supervision, guidance on decentralized encrypted transactions, and emphasis on supervisory responsibilities. At the same time, it is necessary to further clarify the regulatory scope of anti-money laundering and anti-terrorism financing regulations in various jurisdictions.
1. 31 jurisdictions have established special agencies responsible for law enforcement supervision, including central banks, tax authorities, or other specialized organizations;
2. 15 jurisdictions have begun to conduct on-site and off-site inspections of virtual asset service providers in accordance with regulatory regimes;
3. Eight jurisdictions have imposed penalties on virtual asset service providers who violate anti-money laundering and anti-terrorism financing regulatory requirements.
secondary title
3. Evaluation of Data Transfer Rules Implementation
Adoption and enforcement of the Travel Rule by FATF jurisdictions has been less than satisfactory, mainly because most jurisdictions believe that there is currently a lack of scaling technology in the market that meets the requirements of the Travel Rule solutions, and many virtual asset service providers are unable to meet all compliance requirements. While FATF recommends technology-neutral solutions, policymakers in some jurisdictions are exploring emerging solutions.
While optimistic about the prospects for implementing data transfer rules, FATF also acknowledged that there are currently obstacles in the implementation process, such as:
1. It is difficult for some virtual asset service providers to determine the counterparty;
2. There are compliance issues in private wallets and non-custodial wallets that trade with virtual asset service providers;
3. There are problems with data batch processing and interoperability;
4. The Virtual Asset Liaison Group of the Financial Action Task Force on Anti-Money Laundering also provided few immediate solutions (Carbon Chain Value Note: This group is mainly responsible for monitoring the virtual asset industry).
In response to current and future regulatory obstacles, the Financial Action Task Force on Anti-Money Laundering has emphasized and reiterated its determination to cooperate with the cryptocurrency industry, hoping to further identify and promote more effective solutions, and promote virtual asset service providers to implement data transfer rules. Over the next 12 months, the Financial Action Task Force on Money Laundering will explore deployable data transfer rule solutions and hopes to make significant progress on this front.
The FATF acknowledges that industry collaboration is now critical in exploring compliance mechanisms for data transfer rules, and that the open source initiative appears to be favored by the FATF. The goal of FATF is to preserve security and privacy values while enabling protocol integration and usability across virtual asset service providers. Here is an example of a solution: the Data Transfer Rules Information Sharing Alliance (TRISA), which has implemented the interVASP IVMS101 messaging standard and is working with PayID, OpenVASP, Shyft and BIP75.
Not only that, the Financial Action Task Force on Anti-Money Laundering also pointed out that continued open dialogue and cooperation between virtual asset service providers and regulators are crucial, because both the public and private sectors are exploring uncharted territory, and there are Building a secure and accessible digital payment system with global coverage.
Future Risk Mitigation Strategies for Virtual Assets and Virtual Asset Service Providers
The Financial Action Task Force on Money Laundering found that stablecoins are flooding the private and public sectors, but there is a lack of AML/CFT infrastructure in this space. In addition, the Financial Action Task Force on Anti-Money Laundering realized that there is still a serious problem in the current encryption industry: the lack of anti-money laundering regulatory control beyond the transfer of funds between virtual asset service providers, so they proposed several risk mitigation strategies:
1. Limit peer-to-peer transaction volume and transaction value;
2. Virtual asset transactions must go through virtual asset service providers or financial institutions;
3. Implement the most severe measures - prohibit or refuse to use non-custodial wallets for virtual asset transfers.
Over the next twelve months, the Financial Action Task Force on Money Laundering will continue to explore, assess the changing risk landscape of the virtual asset market, and provide further guidance to limit the potential for non-custodial wallets to be used by money launderers and terrorists. Provide financing opportunities. FATF also encourages the crypto industry to be proactive in adopting new products, services and technologies to better combat terrorist financing and money laundering.
FATF Next Steps to Implement Crypto AML/CFT With New Chair
After the FATF chairman and former central bank treaty chief Liu Xiangmin presided over his third and final plenary meeting, the groups new chairman will be German Markus Pryor, who acknowledged Will promote stricter anti-money laundering enforcement activities, focusing on five major areas:
1. Digital transformation of anti-money laundering/anti-terrorist financing;
2. Combating the financing of terrorist activities motivated by race or ethnicity;
3. Fight against money laundering and illegal immigration;
4. Combating environmental crimes;
Marcus Pryor said that during his tenure as chairman, the Financial Action Task Force on Money Laundering will continue to optimize and improve the regulatory standards for virtual assets/virtual asset service providers, and will also launch an initiative to monitor virtual assets risk. Unlike the previous rotating chairman, Marcus Pryors term will last for two years (Liu Xiangmins term is only one year), he revealed the anti-money laundering/counter-terrorist financing digital transformation plan of the Financial Action Task Force on Money Laundering include:
Original link:https://ciphertrace.com/
