The Financial Action Task Force (FATF), an international anti-money laundering watchdog, has released updated guidance on cryptocurrencies and crypto asset service providers. The release portrays renewed commitment to stay current with rapidly evolving technology and business practices in the industry, emphasizing the need for regulators to remain agile as well as addressing specific new developments within the industry. Earlier, the FATF had issued guidance to crypto exchanges to take proper measures to prevent money laundering.
The revised FATF guidance comes following a 12-month review of the initial release.
The revised guidance from the FATF comes following a 12-month review of the initial release, which found that many jurisdictions’ anti-money laundering (AML) and combating the financing of terrorist (CFT) regimes with respect to cryptocurrencies were still underdeveloped or not developed at all. The FATF had issued guidelines to correct those crypto laws. Though FATF guidance is not law, these recommendations will be influential in setting new regulations in member countries. The new FATF guidance is likely to be highly indicative of where domestic regulatory approaches toward digital assets are likely to go.
The new guidance seeks clarity over crypto asset’s definition.
The changes make some important clarifications and appear to be aimed at closing gaps by better defining the boundaries of FATF’s remit concerning digital assets. For example, the guidance highlights six focus areas for the updated guidance, the first of which is to “clarify the definitions of virtual assets and virtual asset service providers to make clear that these definitions are expansive and there should not be a case where the FATF Standards do not cover a relevant financial asset.” There is also a focus on the rise in crime associated with digital assets and how new innovations within the industry might facilitate these, FATF noted.