FATF upset, concerned by nations' slow pace in regulating crypto: details

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The Financial Action Task Force (FATF) has expressed concern that many countries have not implemented the rules set out to regulate the virtual digital assets sector. A report released by FATF states that delays in implementing and adopting these crypto-related regulations are creating space for criminal activities. The organization has analyzed 12 months of data to produce a list of countries, detailing the rules adopted by each country.

“In February 2023, the FATF Plenary agreed on a roadmap to strengthen the implementation of FATF standards on virtual assets and virtual asset service providers (VASPs). Many countries have still not fully implemented FATF requirements on virtual assets and virtual asset service providers to prevent their misuse to finance illicit finance, the organization said in an official post.

The Paris-based global financial watchdog is trying to address issues related to the misuse of crypto assets by criminals for money laundering or terrorist financing. In November 2022, the FATF informally ordered countries to comply with its anti-money laundering (AML) rules to avoid being 'grey listed'.

Among other regulations, FATF has directed all countries to allow only licensed firms to deal with crypto assets. The FATF has also directed countries to collect details about senders and recipients of crypto assets, especially regarding suspicious transactions. The list that FATF has compiled marks countries that have or have not met certain criteria set by FATF regarding crypto activities.

These criteria include conducting risk assessments, implementing licensing regimes and supervisory oversight of VASPs.

“Virtual assets are inherently international and borderless, meaning that failure to regulate VASPs in one jurisdiction could have serious global implications. This is particularly worrying,” the organization said. “The purpose of this table is to enable the FATF Network to encourage jurisdictions with materially significant VASP activity to fully implement Recommendation 15 in a timely manner.”

India appears to have followed all the rules laid down by FATF. On the other hand, some countries like Australia, Finland, Greece, Malaysia and Portugal are still in the process of implementing FATF rules.

Ashish Singhal, co-founder of India's CoinSwitch crypto exchange, has responded to FATF's concerns.

“We appreciate India's proactive approach in conducting VASP risk assessment and implementing the travel rule. India’s mutual assessment was conducted last year and a possible full discussion is expected in June this year,” Singhal wrote in a LinkedIn post.


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