Call for stricter regulations to deal with money laundering
Raja Kumar, Chairman of the Financial Action Task Force (FATF), an international regulatory body, said on the 18th that international standards advocated by the FATF, such as travel rules, should be strictly observed in the crypto asset (virtual currency) sector. published a document.
The document is titled “Ending the Lawlessness of Cryptocurrencies”. He also called on the G7 (the seven major countries) to fully and effectively implement the FATF recommendations, which serve as global standards, in order to combat money laundering and terrorist financing.
The FATF is an international organization that oversees anti-money laundering measures. Although the recommendations themselves are not legally binding, they have great influence because they conduct examinations of member countries and disclose the list of non-cooperating countries.
Thirty-seven countries and regions, including the G7, and two regional organizations are members of the FATF, and FATF recommendations apply to more than 200 countries and regions around the world.
In particular, the FATF has set travel rules that stipulate information sharing when transferring cryptocurrencies, and they will be fully enforced in Japan from October 2022.
connection: Summary of additional measures for travel rules and domestic exchanges to be enforced from October
What are Travel Rules?
Rules for international wire transfers to prevent money laundering advocated by FATF (Financial Action Task Force). Crypto Asset Service Providers (VASPs) are required to collect and exchange sender and receiver information during transactions and to ensure the accuracy of that information. International Know Your Customer (KYC) rules will be applied to cryptocurrency transfers between eligible VASPs.
‘G7 should lead by example’
Chairman Kumar said the FATF’s recommendations are not being implemented in many areas.
73% of countries, including some G20 countries, are still non-compliant or only partially compliant with FATF standards and have not yet begun to supervise cryptocurrency activity. This situation is unacceptable and must be addressed urgently.
As a background, he explained that ransomware attacks have increased in recent years, and in many cases ransoms are paid in virtual currency. Other uses include sanctions evasion and terrorism financing.
In this context, G7 countries should “lead by example and regulate the cryptocurrency sector so that there is no safe place for illicit financial transactions,” he said.
What is ransomware
Malware that demands money in exchange for restoring the original state after hacking. Also known as ransomware. Once infected, it encrypts other people’s important documents and photo files without permission, locks the PC to restrict its use, and demands money. .
On the other hand, the G7 side is also said to be ready to ask the FATF to consider expanding the regulation not only to transactions between exchanges but also to transactions between individuals.
connection: G7 to request FATF to consider regulation of interpersonal transactions of virtual currency = Nikkei
At its February meeting, the FATF agreed to accelerate anti-money laundering and combating the financing of terrorism (AML/CFT) in the cryptocurrency sector.
He also stressed the need for international cooperation mechanisms and tools for authorities to track cryptocurrency transactions and recover illicit funds.
connection: FATF General Meeting Report Strengthening Implementation of Standards to Prevent Abuse of Virtual Currency