Financial Action Task Force (FATF)
The Financial Action Task Force is an inter-governmental body established in 1989 by the G7 Summit to promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. Through its 39 members – 36 countries plus jurisdictions such as Hong Kong, China and Singapore; 2 regional organizations; and 1 observer organization – FATF works with global partners to set standards in these areas. It also monitors progress against those standards through mutual evaluations of member states’ compliance regimes.
Since 2012, FATF has been increasingly focused on reducing risks associated with virtual assets (cryptocurrencies). In June 2019 it released guidance setting out a risk based approach for regulating cryptocurrency activities across various sectors including exchanges that facilitate trading between cryptocurrencies or between fiat currency/virtual currencies. The guidelines provide guidance on customer due diligence requirements, Know Your Customer procedures when dealing with customers using virtual asset services providers (VASPs), registration requirements for VASPs operating in different regions, monitoring suspicious activity reports from VASPs etc., Additionally they require crypto businesses like wallets & exchanges to share information about their users when sending or receiving funds internationally i.e Travel Rule Implementation . According to this rule all crypto transactions above $1000 must be reported alongwith identification details like name , address etc if required by relevant authorities . This will help law enforcement agencies detect any illicit activities involving digital currency payments which would otherwise remain undetected due to lack of transparency available under traditional banking systems..
In conclusion , FATFs’s regulations are aimed at increasing safety& security while dealing with cryptocurrencies so as ensure better protection against malpractices such as money laundering & terrorism funding thus preserving the integrity of the whole ecosystem globally
