FATF Cryptocurrency Standards
The Financial Action Task Force (FATF), an international organization, sets standards and policies to combat money laundering and terrorist financing. In recent years, this has extended to the cryptocurrency industry as well. The FATF’s “Travel Rule” requires that virtual asset service providers (VASPs) exchange customer data like names and account numbers when transacting with one another in order to prevent illegal activities such as fraud or money laundering.
In 2019, the FATF issued a set of updated guidelines on how VASPs should comply with the Travel Rule. These guidelines are known as “Recommendations 16-19” or sometimes called “the FATF Crypto Standards”. Under these recommendations, VASP must:
– Collect information about their customers’ identities;
– Verify customers’ identities before processing transactions;
– Share specific transaction details—including sender name/address/country code & recipient name/address/country code—with other VASPS involved in any given transfer;
– Monitor suspicious behavior by tracking large transfers between wallets over time; and
– File Suspicious Activity Reports for certain types of potentially nefarious activity observed during monitoring processes.
By implementing these measures into their operations, cryptocurrency businesses can help ensure that they are compliant with anti-money laundering regulations put forth by organizations like the FATF while also helping protect users from criminals who might use cryptocurrencies for illicit purposes.. Additionally, governments around the world have started adopting similar regulatory frameworks based on Recommendations 16-19 so it is important that all cryptocurrency businesses familiarize themselves with them if they wish to remain compliant both domestically and internationally
