Financial Action Task Force Calls for Increased Regulation of Crypto to Combat Crime

The lack of regulation for crypto and crypto service providers has created an opportunity for criminals and the proliferation of terrorist financing, according to this year’s Financial Action Task Force (FATF) Plenary session.

Delegates from over 200 countries attended the annual conference, which concluded on Thursday in Singapore.

The FATF decided to strengthen its Recommendation 15, which addresses virtual assets and virtual asset service providers. It also urged countries to implement these revised requirements, including the controversial “travel rule” that requires obtaining, holding, and transmitting originator and beneficiary information related to transactions.

Many countries (and crypto service providers) have failed to implement these requirements.

In order to “encourage” implementation and compliance with the rules, FATF agreed on a roadmap to strengthen the implementation of their standards on virtual assets and virtual asset service providers.

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This will include a review of current levels of implementation. The FATF plans to issue a report in the first half of 2024 on steps FATF members and FSRB countries with “materially important virtual asset activity” have taken to regulate and supervise virtual asset service providers.

The FATF has stressed the need for increased regulation and supervision of virtual assets and virtual asset service providers to prevent criminals and terrorist financiers from exploiting the lack of regulation in many countries. FATF considers the travel rule as a crucial tool in preventing illicit activity in the virtual asset market.