FATF future regulatory recommendations. What does it mean for crypto companies?
22 of February FATF introduced crypto community a few key aspects (in a form of a draft) of future regulatory recommendations regarding AML/CTF risks eliminating. We remind you that earlier in October 2018 a FATF plenary session took place. According to its results, acceptance ML/TF risks standards associated with virtual asset activities in June 2019 was announced. Moreover, a text of this Interpretive Note will be formally adopted as part of the FATF Standards in June 2019. We need to figure out what explanations FATF gave.
Here are the main points:
1. Token issuers finally get the legal name. Now we are virtual asset service providers (VASPs).
2.VASPs should be required to be licensed or registered. But country no need to impose a separate licensing or registration system with respect to natural or legal persons already licensed or registered as financial institutions
3.VASPs should be supervised or monitored by a competent authority (not an SRB), which conduct risk-based supervision or monitoring. Authorities will be able to conduct inspections, compel the production of information and impose sanctions. In other words, authorities will have the power to withdraw, restrict or suspend the VASP’s license or registration.
4. Sanctions should be applicable not only to VASPs but also to their directors and senior management.
5. For any transactions above 1000 EUR/USD CDD (customer due diligence) will be required.
6. Both transaction parties (originator and beneficiary) must hold information about each other and other counterparts and make it available on request to appropriate authorities. Other requirements of R.16 (including monitoring of the availability of information, and taking freezing action and prohibiting transactions with designated persons and entities) also apply.
7. Countries should rapidly, constructively, and effectively provide the widest possible range of international cooperation in relation to money laundering, predicate offenses, and terrorist financing relating to virtual assets.
What does it mean for crypto companies? First of all, anonymity will not have a place. If be clear It must not be a place for any payment systems allowing transfer of funds received from suspicious deals. The fight against the shadow economy must be carried out constantly and everywhere. Secondly, there is nothing new from FATF. Everything is based on already issued recommendations for financial institutions. However, no explanations of how to carry out this work in the field of digital (virtual) assets. At last, it is obvious that all work associated with AML/CFT will be in responsibility of national authorities.
In June, a final document will be issued. Most likely, it will announce needs to form national standards in accordance with FATF recommendations. And it means that at the beginning of 2020 AML/CFT risk eliminating work will be real and tangible. The era of crypto adoption will possibly come.
