The executive secretary of the FATF and the organization’s representative in the G20, David Lewis, said that not all cryptocurrency firms comply with the AML rules.
In June last year, the Financial Action Task Force (FATF) published a final list of recommendations to prevent money laundering and terrorist financing through cryptocurrencies. Lewis mentioned the “Travel Rule” principle regarding the exchange of customer information. This principle aims to reduce the risk of illegal use of virtual assets and regulate the activities of cryptocurrency firms in accordance with traditional banking rules.
In his speech at the conference, Lewis said that most jurisdictions have already implemented these guidelines into domestic law. But virtual asset service providers (VASPs) are extremely slow to adapt to FATF requirements.
The FATF secretary noted the progress of cryptocurrency organizations in technical terms, as they try to find new solutions to comply with the established rules. However, the “Travel Rule” is not being implemented at a large-scale level in the private sector. Lewis added that the financial leaders of the G20 countries continue to study possible risks related to regulatory compliance. According to him, during the pandemic, cryptocurrencies were more often used to move illegal income, including with the participation of special money laundering networks.
Despite the fact that the total amount of cryptocurrencies used for illegal activities remains low, digital currencies are still used to launder money from the sale of drugs and weapons, child exploitation, human trafficking and evasion of sanctions. Therefore, the G20 countries are concerned that the cryptocurrency industry uses various mechanisms and tools to increase privacy.
We are talking about decentralized exchanges, anonymous crypto assets and cryptocurrency mixers. Firms that frequently change jurisdictions are particularly suspicious. Lewis also said that the FATF plans to present an updated version of its guidelines in June 2021.
Recall that at the beginning of the year, the cryptocurrency derivatives exchange Deribit “moved” from the Netherlands to Panama due to new anti-money laundering (AML) rules, and last month, Ripple CEO Brad Garlinghouse said that the company could relocate from the United States to the United Kingdom. However, Garlinghouse explained that such actions are due to the uncertainty of the regulation of the cryptocurrency industry in the United States and the lack of a clear legal status of the XRP coin.