The third Financial Action Task Force (FATF) Plenary emphasized the necessity of group efforts to address proliferation, terrorism financing, and money laundering. During the meeting, FATF Members agreed to publish a targeted update on implementing recommendations for virtual assets and virtual asset service providers.
FATF’s efforts have been ongoing to strengthen crypto standards. But, it found many jurisdictions to be either partially compliant or non-compliant with these measures.
FATF Crypto Compliance Assessment and Enhanced Measures
Regarding the framework for money laundering and terrorism financing, the FATF made comments about Luxembourg as an international financial center. The Plenary concluded that Luxembourg had successfully met the technical conditions set forth by the FATF.
However, the watchdog pointed out that several areas require improvement. It noted enhancing the recognition, examination, and prosecution of complicated money laundering cases.
Meanwhile, the FATF is now observing several countries more closely, including Cameroon, Croatia, and Vietnam. The organization is aggressively addressing strategic flaws in its anti-money laundering systems in the ‘monitoring list.’
Focus on Virtual Assets and Money Laundering Investigations
The Plenary highlighted the urgent need to regulate virtual assets and VASPs globally. The financial watchdog said, “Four years after the FATF strengthened its standards to address virtual assets and virtual asset service providers, global implementation of these measures remains relatively poor.”
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According to the report, around 75% of jurisdictions are either non-compliant or marginally compliant. Notably, FATF emphasized that some governments still need to implement basic rules, such as the Travel Rule. The framework forbids the transfer of funds to sanctioned people or organizations. And the absence of this rule leaves big gaps that criminals can use.
On June 27, the FATF aims to release a report asking nations to implement its recommendations to address these loopholes.
Strengthening Asset Recovery Measures
The FATF continues its efforts to revise its standards concerning asset recovery. The FATF detailed its plan for better regulation in a statement in February. Additionally, the agency wants to enable nations to jointly and domestically freeze, seize, and confiscate illegal proceeds.
The recommendations come as concerns about North Korean cryptocurrency hackers are escalating. BeInCrypto recently noted that the nation uses its IT know-how to finance its military goals and elude international sanctions. Governments and cryptocurrency users are encouraged to take precautions against upcoming incidents due to the worrying rise in their criminal activity.
The FATF said that a sizable set of adjustments would be authorized by October 2023. These reforms align with the FATF’s priority to strengthen measures against ill-gotten gains.
This occurs when the FATF calls on its members and other governments to enact anti-money laundering and counter-terrorism financing regulations swiftly. In the first half of 2024, the global watchdog will release a table outlining the actions taken by countries to carry out the recommendations involving virtual assets.
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