Violet Vallaya
Paris-based financial watchdog, the Financial Action Task Force (FATF), is sounding the alarm on lax regulations surrounding virtual assets (cryptocurrencies).
A recent report revealed a concerning lack of implementation by many nations regarding FATF’s standards to combat criminal activity in the crypto space.
This isn’t a new concern. In February last year, the FATF outlined a roadmap to strengthen regulations for crypto service providers (VASPs) to prevent money laundering and terrorist financing. However, a year later, their analysis paints a worrying picture.
“Our goal is to establish a level playing field, globally, so that the industry is meeting its regulatory obligations and reducing opportunities for criminals to abuse the sector,” said T Raja Kumar, FATF’s president
The FATF has also mandated that all countries permit only licensed firms to engage in transactions involving crypto assets. Additionally, the FATF has directed nations to gather information on both senders and recipients of crypto assets, particularly regarding transactions deemed suspicious.
The safety of the crypto sector has been marred by high-profile hacks and allegations of terrorist financing, often linked to sanctioned entities like North Korea.
A Legacy of Fraud Fuels Regulatory Push
The urgency behind FATF’s push for stricter crypto regulations is rooted in real-world consequences. The recent high-profile case of Sam Bankman-Fried, sentenced to 25 years for a multi-billion dollar fraud at his exchange FTX, highlights the potential for misuse within the crypto ecosystem.
This concerted effort seeks to curb the nefarious exploitation of digital assets for illicit financial activities.
Kumar underscored the urgency of action, stating, “Virtual assets flow to less regulated jurisdictions,” emphasizing how criminals exploit regulatory gaps.
Who’s Compliant and Who’s Lagging?
A meticulous scrutiny of twelve months’ data has yielded a nuanced understanding of nations’ adherence to crypto-related regulations. While India has set comprehensive rule deployment, others such as Australia, Finland, Greece, Malaysia, and Portugal diligently navigate the path towards full compliance.
