28 Feb 2020
It showed that many were surprised when the US government institution, the Financial Action Task Force (FATF), was pushing for much stricter rules for following and transferring virtual assets. They published a policy “Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (VASPs)” in which they have given new rules that demand VASPs to send also user infos of sender and receiver information so by doing this now ordinary banks and crypto assets transfers very similar. They set a deadline for compliance with this policy for June 2020. For many these requirements are a problem to reach in such a short time it is presenting big technical and business challenges.
Enforcement of new rules
New regulation of FATF and strict deadlines which have been talked a lot about on the news. In this case FATF wasn't the first but they just follow the rules set by FinCEN which a log time is requiring that the Bank Secrecy Act (BSA) funds Travel Rule will be applied to andy kind of cryptocurrency transfers and is already applied to crypto assets since 2011, and that FinCEN is serious about enforcement.
The fact is that crypto exchanges are, in all due essence, financial institutions. And they need to take cerian responsibilities as such, to protect their users from potential misuse. If banks are binded by BSA and crypto exchanges adre same as bank financial institutions then it’s logical to have the same rules. These rules demand that the information sharing be done, also or demands that parties involved in transfer know each other with gter do transfer fiat or CVC this holds true for VASP-to-VASP and bank-to-VASP.
If any exchange wants to be compliant with both FinCEN and FATF Travel Rules they would need to have knowledge whether the entity that is receiving the funds is a financial institution or not.
These rules will make life much harder for professional money launderers which were profiting in last years without any crypto AML regulations. These rules that are set in place will make criminal groups much easier to follow and reduce their profits. We know that whis is effective as we see that money laundering arescred and are migrating to jurisdictions with weak AML policy.
It’s gerneral knowlage that root of all investigations is ti terrorism, human trafficking, narcotic trafficking, is always by following money path and therefore always in flolowing paths of money laundering. This is quite logical and expected as all professional criminals are there for earning money. Today there are many highly sophisticated criminal organizations,like cartels, terrorist organizations, which have enough funds to use professional money laundering networks. This regulation will not stop then but it will make it more difficult to realise it.
Compliance of Privacy Coins
This is a special area and for reason of security many of exchanges have already banned these coins, here it’s necessary close cooperation form exchanges and developers to set a system of compliance in place as exchanges don't really understand how to implement regulations on these kinds of exclusive coins. This is in interest of both sides as no exchange will accept to be fined by state and potentially closed.
It's obvious that FATF and FinCEN are not advocating an outright ban on privacy coins as long there are following regulations to the letter, regulations are there to protect all the players in the ecosystem, and they are not enemies of the system.
Banks entering Crypto World
As time goes it’s obvious that crypto is here to stay and banks are following the trend set up in place by other influential institutions and slowly even though hidden different part of their funds into crypto in search of more profits this path is a fact and we can see that there is a trend of hidden crypto businesses operating in banks. br />
Compliance with Travel Rule
We expect that generally most organisations will be able to adopt new compliance rules and small companies that are unable to do it have two options either to close or to move their operation in some county with less AML rules.