FATF Crypto Standards
The Financial Action Task Force (FATF) is an inter-governmental body that develops policies to combat money laundering, terrorism financing and other related threats to the integrity of the international financial system. In June 2019, FATF released its updated standards for virtual asset service providers (VASPs), which set out a framework for how crypto businesses should conduct themselves in order to prevent criminal activity. These standards have been adopted by many countries around the world, including Canada, Japan and South Korea.
What are VASPS?
A virtual asset service provider (VASP) is any natural or legal person who provides services associated with cryptocurrency transactions such as buying/selling digital assets; exchange services; custodial wallet services; financial advice regarding cryptocurrencies etc. The new FATF guidelines apply specifically to these types of entities but can also be applied more broadly across all sectors involved in cryptocurrency activities – from exchanges and payment processors through to banks providing banking services on behalf of customers engaged in cryptocurrency activities.
What do the new FATF requirements mean for VASPs?
Under the newly implemented regulations, Virtual Asset Service Providers will be required to: obtain information about their customer’s identity before carrying out any kind of transaction involving cryptocurrencies; monitor customer activity regularly so as not allow illicit funds transfer or frauds ; implement appropriate risk management practices when dealing with customers suspected of having links with terrorist organizations or crime groups; record details relating each transaction they carry out – including sender’s name , recipient’s name , IP address used during a request etc.; report suspicious transactions immediately without delay ; cooperate closely with regulators & law enforcement authorities whenever necessary . They must also ensure compliance within their own organisationby appointing dedicated staff members responsiblefor implementing anti-money laundering measuresand monitoring potential risks posed by certain jurisdictions..
What happens if a VASP fails comply ?
Failureto adherewiththe provisions putforthbythe FAFTcan resultin serious consequencesincludingbutnotlimitedto : monetary finesfromregulatorsorlawenforcementagencies ; revocationoflicensesissuedtoprovidevirtualassetrelatedservicesintheparticularjurisdictionwhereinfractionsweremade ; suspensionofoperationsuntilcomplianceisprovedetc,.Itisimportanttostressthatnoncompliancecould poseaseriousthreattotheintegrityofthecryptomarketsandresultinsignificantreputationaldamageaswellascriminalpenaltiesfortheinvolvedpersonsorteams..
