Defiance of FATF crypto laws may lead to countries greylisting
Financial Action Task Force (FATF) is a global financial policy-making body founded to combat money laundering and terrorism financing.
It provides guidelines for anti-money laundering (AML) and counter-terrorist financing (CTF) laws. In 2014, it expanded its mandate to digital assets, too. It was to prevent the misuse of funds for illegal activities.
Now, to ensure the FATF crypto regulations, the organisation is planning to grey list the countries that fail to comply with its laws. According to an Al Jazeera report, the financial watchdog will conduct annual surveys for each country’s performance. It will examine the countries’ measures to ensure FATF crypto regulations.
Annual reviews for FATF crypto laws compliance
The organisation has opted for annual reviewing instead of evaluations on 5-year cycles. This move reduces the time window for countries to impose terrorist financing and anti-money laundering regulations. Moreover, there will be the added pressure of greylisting. It will force them to bring virtual asset service providers and users within the country under regulations.
The automatic greylisting of countries may affect their overall ratings. This may also result in being blacklisted by the organisation if no significant changes are evident in the country.
Response from the crypto industry
The industry leaders have responded to this move from the financial watchdog. They may reveal a plan of action in the Summit of G20 Leaders, which is scheduled this month. It is likely to highlight the difficulties cryptocurrency investors, exchanges, and other stakeholders face due to harsh regulatory measures.
Al Jazeera reported that Ron Tucker, the co-founder of the International Digital Asset Exchange Association (IDAXA), is of the view that it may cause trouble for the end user. The reason is that the greylisting fear will force “countries to unbank crypto exchanges.”
Ron Tucker also indicated risks to financial inclusion. He mentioned that the users of this asset class in developing countries would be affected.
Author: Wasay Ali
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