On 30 June 2022 the Financial Action Task Force (FATF) issued a third targeted update on implementation of the FATF Recommendations within the context of Virtual Assets (VAs) and the Virtual Asset Service Providers’ sector.
The report builds on the FATF’s previous two reviews on implementation by providing a short update on the latest country compliance with a specific focus on FATF’s Travel Rule to respond to particular challenges that countries and private sector face in this area.
The report points to a continued need for various countries among FATF and FSRB members to strengthen the understanding of Money laundering / Terrorism Financing (ML/TF) risks of the VA and VASP sector, and to accelerate enforcement to mitigate such risks.
In particular, the report finds that jurisdictions have made only limited progress over the last year in implementing FATF’s Travel Rule requiring VASPs and other financial institutions to share relevant originator and beneficiary information alongside virtual asset transactions. Thus, only 29 jurisdictions out of the 98 FATF’s March 2022 survey respondents have passed relevant Travel Rule laws, and only small subset of these jurisdictions have started enforcement.
The report further states that despite the vast availability of various technological solutions aimed to facilitate Travel Rule compliance in practice, there is still a need within a private sector to continue increasing interoperability between solutions and across jurisdictions.
Finally, the FATF’s report reviews market developments and emerging ML/TF threats highlighting the continued need to monitor the growth of, and illicit financing risks associated with Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs) and unhosted wallets.
The FATF calls on all countries to address the findings of the report and to implement the FATF’s Standards on VAs and VASPs, including the FATF’s Travel Rule, to mitigate criminal and terrorist misuse of virtual assets.
In the meantime, the FATF will facilitate further discussions with member countries on common implementation, issues and challenges through G7/G20 and other high-level policy bodies; and will continue monitoring market trends for material changes and developments.
Further review of progress and remaining challenges will be conducted by June 2023.
The full version of the FATF update can be found on this link:
For further information, please contact:
Franco Falzon C.P.A. LL.M (Managing Director) or Olga Ivanova LL.M (Legal & Compliance)
E: info@ffinternational.com.mt
T: +356 2010 7771 (office)
M: +356 9989 5679 (mobile)
Disclaimer
While FF International Limited (hereinafter referred to as “FFI”) endeavours to ensure that any information published in articles / publications / memos / updates (including any information published on our website) is accurate as at the time of publication, FFI nor any of their respective directors, partners, officers, employees, or agents make any representation or warranty (express or implied) or accept or will accept any responsibility or liability in relation to the accuracy or completeness of the information contained published in our articles / publications / memos / updates (including any information published on our website) or any other written or oral information made available or published on our articles / publications / memos and updates. Any responsibility or liability in respect of any such information or any inaccuracy or omission arising from any article / publication / memo is expressly disclaimed. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given as to the achievement or reasonableness of any future projections, estimates, prospects or returns published on our articles / publications / memos / updates (including any information published on our website) . The content of the above article / publication / memo / update and any information published on our website is intended to serve solely as general information only and its purpose is not to provide any specific professional advice whether of a financial, legal, tax or other nature. Since it is recommended that business decisions be based only on qualified professional advice, neither FFI nor any related company belonging to FFI nor any of the respective directors, partners, officers, employees, or agents of FFI will be held liable for any damages which might result as a consequence of relying on the information contained within. FFI including any directors, partners, officers, employees, or agents of FFI and / or any entity related to FFI accept no liability whatsoever for the content of this article / publication / memo / update for the consequences of any actions taken on the basis of the information provided. If you have any questions relating to the accuracy and correctness of the above article / publication / memo / updates or any information published on our website you are kindly requested inform us by sending us an email on info@ffinternational.com.mt
