As published on fnlondon.com, Friday 1 July, 2022.
Most countries lack “travel rule” laws that could help prevent the illicit use of cryptocurrency by criminals and terrorists, a global anti-money-laundering watchdog said on 30 June.
The rules would require companies and service providers to share information about senders and recipients in cryptocurrency transactions. Only about 30% of jurisdictions surveyed by the Financial Action Task Force said they have passed such legislation, and only a small subset of the group has started enforcement of the laws.
FATF, a Paris-based intergovernmental body that develops and promotes anti-money-laundering standards, said in a report published 30 June that more countries need to understand the money-laundering and terrorist-financing risks within the crypto industry, and one way to mitigate such risks is to implement travel rules.
As of March, only 29 of 98 jurisdictions that responded to FATF’s survey said they had passed relevant rules and only 11 of those 29 had started enforcement and supervision on those rules, FATF said. About a quarter of the respondents were in the process of passing such laws and about one-third hadn’t yet started introducing relevant laws, FATF said.
While there are technological solutions to facilitate compliance with travel rules, FATF said the private sector still needs to increase the ability to exchange information across jurisdictions.
In addition, FATF said it would continue to monitor emerging risks within the sector, including the use of crypto to evade sanctions and to launder illicit proceeds from ransomware attacks. FATF also noted that member countries had expressed increasing concerns about decentralised finance and nonfungible tokens as difficult areas to implement FATF standards.
FATF sets standards for member countries to implement, and member jurisdictions then write relevant rules that would require compliance from companies and organisations. FATF conducts mutual evaluations of member countries to assess the effectiveness and implementation of the anti-money-laundering measures. FATF’s mutual evaluations consist of peer reviews in which members from different countries assess the effectiveness and implementation of one another’s anti-money-laundering measures.
FATF said it would help promote implementation of the travel-rule requirement by facilitating discussions with member countries and monitoring market trends that might need additional work. FATF will also conduct another review on the travel-rule implementation progress in June 2023.