Updated: Nov 19, 2020
The FATF has completed a review of the implementation of its revised Standards on virtual assets and virtual asset service providers, 12 months after the FATF finalized these amendments. The June 2019 revisions to the FATF Standards clearly placed anti-money laundering and counter-terrorism financing (AML/CFT) requirements on virtual assets and virtual asset service providers (VASPs). The FATF also agreed to undertake a 12-month review by June 2020 to measure how jurisdictions and the private sector have implemented the revised Standards, as well as monitoring for any changes in the typologies, risks and the market structure of the virtual assets sector.
This report sets out the findings of the review. The report reviews the implementation of the revised Standards and sets out:
how money laundering and terrorism financing risks and the virtual asset market have changed since June 2019 (Section 1);
jurisdictions’ progress in implementing the revised Standards (Section 2);
the private sector’s progress in implementing the revised Standards, including the development of technical solutions for the implementation of the travel rule (Section 3);
issues identified with the revised FATF Standards and Guidance (Section 4); and
FATF’s next steps regarding virtual assets (Section 5).
The report finds that, overall, both the public and private sectors have made progress in implementing the revised FATF Standards. 35 out of 54 reporting jurisdictions advised that they have now implemented the revised FATF Standards, with 32 of these regulating VASPs and three of these prohibiting the operation of VASPs. The other 19 jurisdictions have not yet implemented the revised Standards in their national law. While te supervision of VASPs and implementation of AML/CFT obligations by VASPs is generally nascent, there is evidence of progress. In particular, there has been progress in the development of technological solutions to enable the implementation of the ‘travel rule’ for VASPs, even though there remain issues to be addressed by the public and private sectors.
The virtual asset sector is fast-moving and technologically dynamic, which means continued monitoring and engagement between the public and private sectors is necessary. As set out in the report, the FATF has agreed to continue its focus on virtual assets and undertake the following actions. The FATF will:
continue its enhanced monitoring of virtual assets and VASPs and undertake a second 12-month review of the implementation of the revised FATF Standards on crypto compliance companies and VASPs by June 2021 and consider whether further updates are necessary;
release updated Guidance on virtual assets and VASPs, addressing issues including so-called stablecoins, anonymous peer-to-peer transactions and travel rule implementation;
continue to promote the understanding of money laundering and terrorist financing risks involved in transactions using virtual assets and the potential misuse of virtual assets for money laundering and terrorist financing purposes by publishing red flag indicators and relevant case studies by October 2020;
continue and enhance its engagement with the private sector, including VASPs, technology providers, technical experts and academics, through its Virtual Assets Contact Group; and
continue its program of work to enhance international cooperation amongst VASP supervisors.
These actions set the FATF’s forward work program on virtual assets for the coming year. These findings also support the conclusions made by the FATF in its report to the G20 on so-called stablecoins, which was completed simultaneously with this report.