The updated guidelines address an array of crypto industry-based issues including stablecoins, DeFi, NFTs and P2P transactions.
Financial Action Task Force, the intergovernmental organisation aimed at combating money laundering released updated guidelines on virtual assets and virtual assets service providers (VASPs) to enable countries to effectively formulate their crypto regulation policies.
In a 109-page document, the standard-setter for global anti-money laundering and counter-terrorist financing regulations covers a wide range of emerging topics in the industry from stablecoins and DeFi to NFTs and P2P transactions.
The updated guidance highlights the need for immediate action to mitigate the money laundering risk posed by the rapid development, growing adoption and the cross-border nature of virtual assets.
Malcolm Wright, advisory council chair of Global Digital Finance stated that the updated guidelines offer greater clarity both to regulators and the crypto industry in terms of what to expect with crypto regulations going ahead. He added that regulatory clarity on fundamental concepts such as screening deposits and withdrawals for sanctions and elements of the DeFi ecosystem was a welcome change.
“Whilst the definition of a VASP remains the same, the inclusion of proliferation financing brings the guidance into line with the broader FATF remit,” the expert stated.
The FATF categorised the current implementation of its standards by countries over the last 12 months as “far from sufficient.”
“All countries should strive to ensure their domestic regimes contribute to even and efficient implementation globally in order to avoid jurisdictional and supervisory arbitrage,” the guidelines explain.
The FATF also reiterated the call for countries to implement the ‘travel rule’ in order to improve the trackability of crypto transactions. Under the travel rule, crypto organisations are mandated to share identifying information on the originator and beneficiary of a transaction with regulatory bodies.
The organisation advised countries to undertake a staged implementation of the travel rule as long as alternative measures to mitigate money laundering risks are present in the interim.
The updated guidelines by the FATF can be a sign of more incoming regulation towards the crypto industry. However, the timeframe and cost of implementation by individual countries will determine the impact of such regulation on crypto companies, especially for those that operate across countries and will need to adapt to different local regulations.
