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FATF unveils international rules on oversight of crypto sector
The Financial Action Task Force (FATF), a Paris-based international watchdog for money laundering, told countries on Friday (June 21) to tighten oversight of cryptocurrency firms to stop digital coins such as bitcoin being used to launder cash.
Under the new guidance published, governments will be compelled to register and supervise crypto-related businesses, which will have to carry out detailed checks on customers and report suspicious transactions.
“By adopting the standards and guidelines agreed to this week, the FATF will make sure that virtual asset service providers do not operate in the dark shadows. This will enable the emerging FinTech sector to stay one-step ahead of rogue regimes and sympathizers of illicit causes searching for avenues to raise and transfer funds without detection” U.S. Treasury Secretary Steven Mnuchin told a FATF meeting held in Florida between 16-21 June.
During six days of meetings, representatives from the 205 members of the FATF Global Network, the IMF, UN, World Bank and others discussed a range of important issues, focused on protecting the integrity of the financial system and contributing to global safety and security. The United States’ currently holds the one-year presidency of the FATF till June 30.
Under the new rules, the required information for each transfer includes:
(i) originator’s name
(ii) originator’s account number where such an account is used to process the transaction
(iii) originator’s physical (geographical) address, or national identity number, or customer identification number that uniquely identifies the originator to the ordering institution, or date and place of birth;
(iv) beneficiary’s name; and
(v) beneficiary account number where such an account is used to process the transaction
The move by the FATF marks the first worldwide attempt to regulate the $300 billion coin trading market. It also comes a week ahead of the annual Group of 20 (G20) summit in Osaka, Japan, on June 28-29. The G20 has been pushing for harmonisation of crypto asset regulations
The crypto community is expected to fight the new rules put forth by financial regulators in the upcoming V20 summit which has been orchestrated to run parallel to G20 Summit. Some big crypto related institutions like Coinbase, bitFlyer, Circle, Kraken and Huobi are going to be a part of the V20 event.
FATF’s recommendations for anti-money-laundering policies are not legally binding. However, countries that fall egregiously out of compliance with FATF standards usually end up on blacklists, eventually losing access to the global financial system.
FATF also said that it will give countries 12 months to abide by the guidelines, with a review set for June 2020.
Will the crypto industry come to terms with the new reality?