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The Financial Action Task Force, the global money laundering and terrorist financing watchdog, has found that many countries are yet to fully implement its requirements aimed at preventing misuse of virtual assets and virtual asset service providers.
Virtual assets (crypto assets) refer to “any digital representation of value that can be digitally traded, transferred or used for payment”.
The FATF plenary had in February 2023 agreed on a road map to strengthen the implementation of its standards on virtual assets and VASPs.
Recently, it carried out a survey on the current levels of implementation and has now published a paper on the “Recommendation 15 by FATF Members and Jurisdictions with Materially Important VASP Activity”.
Financial Action Task Force (FATF)
The Financial Action Task Force is an intergovernmental organization established in 1989 to combat money laundering and terrorist financing.
Here's a breakdown of their key roles:
Mission:
Set international standards for preventing money laundering and terrorist financing.
Promote effective implementation of these standards by member countries.
Activities:
Developing Recommendations: FATF creates a set of recommendations that serve as a blueprint for countries to follow in establishing strong anti-money laundering and counter-terrorist financing (AML/CFT) systems.
These recommendations cover areas like customer due diligence, reporting suspicious activity, and international cooperation.
Researching Methods and Trends: FATF stays updated on how criminals and terrorists move and use funds.
They publish reports to raise awareness about the latest money laundering and terrorist financing techniques.
Evaluating Countries: FATF assesses how well member countries are following the FATF Recommendations.
This is done through a process called "mutual evaluations" where experts from other member countries review a country's AML/CFT system.
Holding Countries Accountable: If a country is found to be lacking in its AML/CFT efforts, FATF can publicly identify them as a "high-risk" jurisdiction.
This can have significant negative consequences for the country's financial sector.
Impact:
FATF plays a crucial role in maintaining the integrity of the international financial system by making it more difficult for criminals and terrorists to launder money and finance their activities.
Over 200 countries and jurisdictions have committed to implementing the FATF's Standards.
What is virtual assets?
Virtual assets, also sometimes referred to as crypto assets or digital assets, are essentially digital representations of value.
They can be traded, transferred, and potentially used for payments.
What virtual assets are and some key points to consider:
Digital Representation: Virtual assets exist electronically, not in a physical form like cash or gold.
Trading and Transfer: They can be bought, sold, and moved between digital wallets.
Potential for Payments: While not universally accepted, some virtual assets are used for payments for goods and services.
Not Fiat Currency: They are distinct from digital representations of traditional currencies (fiat currencies) issued by governments.
Regulation: The regulatory landscape for virtual assets is still evolving around the world.
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