FATF Plenary Highlights & Public Consultation February 2024
The Financial Action Task Force (“FATF”) held its last Plenary in Paris on 21–23 February 2024 which concluded with significant announcements. Most notably, Barbados, Gibraltar, Uganda and the United Arab Emirates have exited the FATF’s “Grey list” (which placed them under increased monitoring).
This is evidence that countries can take active measures to better align their regulations and controls with the FATF guidance, which includes Recommendation 16: The Travel Rule, and improve their global AML/CFT standing and thus competitiveness.
Among other outcomes, the FATF announced that they will be publishing two separate reports; one to help countries align with Recommendation 15 and the other proposing amendments to Recommendation 16.
The FATF’s Recommendation 15 requires regulators to extend AML and CFT standards applicable to traditional financial institutions to include Virtual Asset Service Providers (“VASPs”) by adopting regulative regime. However since the standards became applicable to the virtual assets industry in 2019, progress has been slow in certain regions. The FATF stated: “Many countries have yet to fully implement the FATF’s revised Recommendation 15. Given the inherently borderless nature of virtual asset activity, this lack of implementation leaves significant loopholes globally, that criminals and terrorists exploit.” To help jurisdictions that may have fallen behind, the FATF will publish an overview of the steps that FATF and FSRB member jurisdictions with the most materially important virtual asset activity, based on trading volume and user base, have taken to regulate and supervise virtual asset service providers (VASPs).
On 26 February 2024 the FATF also released a range of options for potential changes to Recommendation 16 and its Interpretive Note on wire transfers for public consultation. The FATF stated “These revisions aim to help make cross-border payments faster, cheaper, more transparent and more inclusive whilst ensuring AML/CFT compliance, and ensure that FATF Recommendation 16 remains technology-neutral.” Revisions include clarifying the roles and responsibilities of different players involved in the payment chain and improving the content and quality of basic originator and beneficiary information contained in the payment messages. The consultation will close on 3 May 2024 as the first step in a wider consultation process. The FATF recognises that due to the technical nature of this subject, a full consultation will require an ongoing dialogue with the relevant bodies and experts in both public and private sectors.
VerifyVASP congratulates FATF members for the achievement of being removed from the FATF Grey list and extends an offer to any government entity looking to enter into a public-private dialogue on Travel Rule compliance to this effect.
We submitted a detailed response to the European Banking Authority’s consultation on Regulation (EU) 2023/113 (‘The Travel Rule Guidelines’) with a particular focus on the clauses covering counterparty due diligence, immediate and secure transmission, return of funds and self-hosted wallets, based on our extensive experience helping VASPs resolve corresponding Travel Rule compliance issues. We look forward to responding to the FATF’s consultation on Recommendation 16.
