The Financial Action Task Force (FATF) has released preliminary guidelines for cryptocurrencies heeding calls to review its cryptocurrency standard
The FATF is an intergovernmental organization founded in 1989 majorly to develop policies against money laundering. Its objective is to “set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.”
As part of its roles, the FATF reports to other global and regional bodies like the G20 on the standards for these financial aspects.
As Smartereum reported the FATF in its meeting in February of last year agreed to revise its cryptocurrency standards while also resolving to “[Improve] the understanding of virtual currencies risks.” Later in the year, the G20 called on the FATF to clarify its position on cryptocurrencies after it earlier tasked the body to come up with definitive recommendations for a global approach to cryptocurrency.
The FATF came out from its latest meeting on Feb. 22 with preliminary crypto requirements. According to the guideline published on its website on Thursday, Feb. 28, the agency said it has been working on an Interpretive Note to a recommendation it made last October to clarify how the FATF standards apply to activities or operations involving virtual assets.
It noted that the new notes of the Interpretive Note have been finalized although a section of it will require the input of private sector consultations in May before it will be ratified at the FATF meeting in June. Comments are expected to reach the FATF Secretariat before an April 8 deadline.
The content of the FATF Crypto Guideline
The FAFT recommended that countries should consider virtual assets as “property,” “proceeds,” “funds”, “funds or other assets,” or other “corresponding value” and as such apply its guidelines for virtual assets and virtual asset service providers (VASPs).
This guideline requires digital assets to be registered in their countries of origin prevent money laundering and terrorist financing with cryptocurrencies while issuers of these assets should also be registered. Furthermore, FATF recommends a government regulation who can provide criminal and civil sanctions as well as freeze transfers, as against self-regulatory practices.
Also, the agency requires that digital asset providers keep records of sender and recipients digital assets which can be provided to local and international authorities.
As Smartereum reported the new chair of financial stability board (FSB) Randal K. Quarles, recently said that the emergence of crypto assets may pose a challenge to global financial frameworks highlighting the need for a robust framework.