Thursday, December 9

Bitcoin exchanges should present account statements of their users, according to the FATF


The Financial Action Task Force (FATF) published this Thursday the update of its guide to regulate service providers with cryptocurrencies and virtual assets in the world.

Among the various recommendations they published in The Guide, they plan to regulate and even reduce peer-to-peer (P2P) transactions, through which, according to them, many of the crimes related to money laundering and terrorist financing.

As specified, countries can consider and implement “appropriate options” to mitigate crime risks at the national level.

Which are? Among the various existing ones, the controls that facilitate the visibility of P2P activity stand out, as well as the crossing of the activity of virtual assets “between obligated entities and non-obligated entities”, such as exchanges, custodial wallets and other intrinsic products of the ecosystem .

They add that such controls may include equivalents to reports of monetary transactions. (like a bank statement) or even a record-keeping rule related to those transfers.

Another measure recommended by the FATF to countries is risk-based ‘continuous enhanced supervision’ of cryptocurrency service providers and entities operating in the ecosystem, “With a specific focus on transactions” that are executed with wallets and other services, including site monitoring “To confirm whether an operator has complied with current regulations.”

They also recommend force operators to allow transactions only to and from addresses “deemed acceptable”, based on the risk-based approach.

And, in addition, the authorities can issue public notices and carry out information campaigns “To raise awareness of the risks posed by P2P transactions.”

Limit anonymous operations with stablecoins

In the document, more than 100 pages long and which is the update of the first one presented in 2019, they also talk about stablecoins, or stablecoins. They admit that right now there is a wide variety of entities that they are involved with these assets and therefore should have a ‘central developer or governing body’ to regulate them.

As specified, a governing body, which consists of one or more natural or legal persons, can set the rules that govern the operation of a stablecoin, as well as determine its functionalities or who can access them.

For them, stablecoins can be more centralized or decentralized, both in terms of their governance and in terms of who can access them. For this reason, and like other virtual assets, “it is important that the money laundering and terrorist financing risks of stablecoins (…) are analyzed continuously and with a vision of the future”.

The FATF suggests, regarding the mitigation of risks with stablecoins, that, among the possible measures, is the limit the scope of users’ ability to transact anonymously, controlling who can access the currency. They also highlight the integration of preventive measures, ensuring that obligations are met “through the use of software to monitor transactions and detect suspicious activities,” for example.

Supervisors should seek that these mitigation measures are in place prior to licensing or licensing and on an ongoing basis. It will be more difficult to mitigate the risks of these products once they are launched.

Financial Action Task Force (GAFI).

A ‘risk assessment’

Meanwhile, the FATF recommends that national authorities carry out a “risk assessment” linked to virtual assets. The study, they specify, should conglomerate all relevant authorities “To understand how specific virtual asset products and services work.”

Countries should consider undertaking short- and long-term policy work to develop regulatory and supervisory frameworks for the activities of cryptocurrencies and service providers (as well as other obligated entities operating in the ecosystem).

Financial Action Task Force (GAFI).

They insist that countries should also require service providers and other entities related to the emerging market to identify, evaluate and take effective action “To mitigate the risks associated with money laundering and terrorist financing.”

According to the FATF, when service providers, such as exchanges or custodial digital wallets, operate under the law of a country, they must evaluate the possible crimes they can commit, and furthermore, apply a risk-based approach “to ensure that appropriate measures to prevent or mitigate those risks are implemented.”

Guide update

This publication is nothing more than the update of the first guide, of 2019, that I wanted precisely to regulate all the activity of bitcoin and cryptocurrencies all over the world.

According to the information of FATF on its official website, the intention of the guide is that the countries evaluate and mitigate the risks associated with financial activities and providers of virtual assets.

As they explain, the guide “will help countries and service providers to understand their obligations against the money laundering and terrorist financing, and to effectively implement the FATF requirements as they apply to this sector ”.

This guidance addresses the areas identified in the FATF 12-Month Review of the FATF Revised Standards on Virtual Assets and Virtual Asset Service Providers that require further clarification and also reflects input from a public consultation in March-April, 2021.

Financial Action Task Force (GAFI).

They specify that from GAFI, which is an independent intergovernmental regulatory body, remain attentive and closely supervising the virtual assets industry and providers “to detect any material changes that require further review or clarification of the FATF Standards.”



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