The Financial Action Task Force (FATF) is a unit tasked with fighting financial crimes. It is pushing for tighter rules to be established to prevent money laundering and terrorism financing. The Task Force members come from many countries, which include those in the G20.
The global economy has also become more digitized at a rapid pace. According to the Task Force, the member states should already have regulations in place to help keep investors safe.
Interpretative Note to Recommendation 15
According to a notice in the group’s website, member states should make better definitions of terms most commonly used in digital money. It notifies national lawmakers to outline crypto as funds, proceeds, funds or other assets.
Virtual assets can be used by malignant groups to finance terrorism. It can also support organized crime through the proliferation of weapons.
Virtual Assets Service Providers Should Play their Part
The task force also recommends that virtual assets service providers (VASPs) should take a more active role in mitigating criminal risks. VASPs include crypto exchanges, trading platforms, wallet manufacturers and other key players in the market.
After the states make these distinctions, they should monitor virtual assets and track them. Part of the notice reads:
…[Countries] should identify, assess, and understand the money laundering and terrorist financing risks emerging from virtual asset activities and the activities or operations of VASPs. Based on that assessment, countries should apply a risk-based approach to ensure that measures to prevent or mitigate money laundering and terrorist financing are commensurate with the risks identified. Countries should require VASPs to identify, assess, and take effective action to mitigate their money laundering and terrorist financing risks.
The task force requires that governments work with VASPs to get information on the people who are making transactions using crypto. The data includes the person (or persons) who sent the money, the recipient and the amount of money sent.
Punishments for Rogue VASPs
Virtual assets service providers, to this end, should put measures in place to combat money laundering and conflict financing. If a VASP abets such organized crime, the FATF states that it should be dissuaded from doing so. The best way to do that, according to the task force, is to suspend its operating license or levy a fine.
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