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FATF: UK Crypto Exchanges Pose ‘Low’ Money Laundering, Terrorist Financing Risk


Added on 13/12/2018

(CNN) The Financial Action Task Force (FATF) revealed that crypto exchanges operating in the United Kingdom pose low money laundering (ML) and terrorist financing (TF) risks.

The global standard setter for ML/TF published a report to evaluate the overall efforts that the UK has put in combating the money-related illegal activities. As the study touched on various topics, including corporate transparency and economic sanctions, it also explored how the country was faring in a relatively new crypto space.

FATF observed that the UK authorities were aware of the risks associated with the growth of new payment technologies like bitcoin, and confirmed that they were taking proper measures to mitigate its use among launderers and terrorists. Excerpts:

“The UK acknowledges the inherent vulnerabilities associated with the anonymity of VCs, and while the risk of ML/TF in this area is assessed as low, the UK acknowledges that there are intelligence gaps and VCs are being used in illicit activity (particularly in online marketplaces for the sale and purchase of illicit goods and services). As a result, the UK intends to regulate virtual currency exchange providers under its implementation of the EU’s fifth Anti-Money Laundering Directive.”

The global watchdog awarded its highest rating to the UK for effectively managing the ML/TF standards, both inside and outside the crypto space. However, it also cautioned the country about how the financial institutions (FI) still need to work on their policies, controls, and procedures to minimize potential ML/TF risks in the booming crypto sector.

“However,” FATF asserted, “there is no requirement on FIs to assess the risks of new products and business products and delivery mechanisms, although this is covered in non-binding guidance.”