On the 28th of October 2021, the Financial Action Task Force (“FATF”) published a document to update and expand its guidelines intended to help national authorities to further understand and regulate Virtual Asset (“VA”) activities and Virtual Assets Service Providers (“VASPs”). The publication is intended to better inform private entities engaging in VA activities on their anti-money laundering and counter-financing terrorism (“AML/CFT”) obligations.
One particular amendment of the updated Guidelines and its recommendations relates to the explicit clarification that the guidelines apply to financial activities involving VAs and VASPs, the latter which are now (following amendments to Regulation 15 of the Guidelines) required to:
- Be regulated for AML/CFT purposes;
- Be licensed/registered; and
- Be subject to effective monitoring and supervision.
The guidelines highlight the importance of taking the appropriate measures to address and mitigate money laundering and terrorist financing (“ML/FT”) risks. Indeed, the Guidelines provide examples of risk indicators for the VA sector which can obstruct transactions or the VASPs’ ability to identify its customers.
The recent updates to the Guidelines focus on six key areas:
- To clarify and expand the definitions of VA and VASPs in order to cover all relevant financial assets within the scope of the FATF Standards;
- To provide guidance on how the FATF Standards apply to stablecoins, and to clarify that a number of entities involved in stablecoin arrangements could qualify as VASPs;
- To provide more guidance on risks and tools available to address ML/CFF risks for peer-to-peer transactions;
- To update the guidelines on the licensing and registration of VASPs;
- To provide additional guidance on the implementation of the so-called ‘travel rule’; and
- To include the Principles of Information-Sharing and Co-operation Amongst VASP Supervisors section.
Do not hesitate to contact us should you require more information and assistance on the above.