Crypto

Reporting ‘limited progress,’ FATF urges countries to introduce legislation for travel rule

The Financial Action Task Force (FATF) reported that 11 out of 98 responding jurisdictions have started enforcing its standards on Combating the Financing of Terrorism, or CFT, and Anti-Money Laundering, or AML.

In an update released Thursday on the “Implementation of the FATF Standards on Virtual Assets and Virtual Asset Service Providers,” the FATF reported the “vast majority” of jurisdictions assessed by the organization’s Global Network since June 2021 “still require major or moderate improvement” in AML/CFT compliance in accordance with the Travel Rule. According to the FATF, countries moving towards implementing these requirements made “limited progress” over the last year, with 29 out of 98 responding jurisdictions reporting passing legislation related to the Travel Rule, and 11 starting enforcement.

“While around a quarter of responding jurisdictions are now in the process of passing the relevant legislation, around one-third (36 out of 98) have not yet started introducing the Travel Rule,” said the FATF. “This gap leaves VAs and VASPs vulnerable to misuse, and demonstrates the urgent need for jurisdictions to accelerate implementation and enforcement.”

The organization added that companies in the private sector had made progress in introducing solutions to support compliance with the travel rule and “taking early steps to ensure interoperability with other solutions.” However, the FATF hinted at the necessity of implementing these solutions quickly, given the “significant threat of ransomware actors misusing VAs to facilitate payments” and funneling illicit funds through Virtual Asset Service Providers, also known as VASPs.

“Countries that have not introduced Travel Rule legislation should do so as soon as possible, and FATF jurisdictions should lead by example by promoting implementation, and by sharing experiences and good practices […] Rapid implementation by jurisdictions will incentivize progress further.”

Related: President of Panama shoots down crypto bill citing FATF guidelines

Among other developments since 2021 included a rise in the growth of decentralized finance, or DeFi, and nonfungible projects, which the FATF labeled as a “challenging area for implementation” of the Travel Rule. The organization cited a Chainalysis report released in February that “suggests that threats from criminal misuse continue” with illicit transactions in DeFi, and reached similar conclusions for NFTs potentially being used for “money laundering and wash trading.”

Under FATF guidelines, VASPs operating within certain jurisdictions need to be licensed or registered. The organization reported in an April update that roughly half of the assessed jurisdictions in 120 countries had “adequate laws and regulatory structures in place” to assess risks and verify beneficial owners of companies, urging them to prioritize identifying and reporting information on cryptocurrency transactions.

This post has been syndicated from a third-party source. View the original article here.

Related Articles

Back to top button