Some jurisdictions have made progress in implementing the revised Financial Action Task Force (FATF) standards, but not enough to fully regulate the crypto industry. This is according to a review by the organisation.
According to the FATF, digital assets are linked to tax crimes, attempts to evade sanctions, drug or arms trafficking, and various types of fraud.
During the coronavirus pandemic, a number of FATF members noted the "increased use of virtual assets to move and hide illicit funds". The review refers to one jurisdiction that reported the use of cryptocurrencies to launder proceeds "from the sale of the COVID-19 drug".
Coinfirm analysts had previously identified several addresses whose owners were selling fake COVID certificates, stolen vaccines and fake certificates.
The FATF also said there is a need for "thorough regulation" of Stablecoin. Experts fear that with their mass adoption, there will be an increase in anonymous peer-to-peer transactions through unregistered wallets.
As part of the review, the organisation found that out of 128 jurisdictions - 38 FATF members and 90 representatives of FATF-style regional groups (FSRBs) - only 58 have implemented the standards. Virtual Asset Service Providers (VASPs) are regulated by 52 countries and banned by six.
"These implementation gaps mean that there is not yet a global approach to prevent the misuse of virtual assets and VASPs for money laundering or terrorist financing," the paper said.
At the same time, the group noted the industry's desire to continue to engage with the FATF.
In March, the regulator proposed amendments to the guidelines for the cryptocurrency industry. According to the draft, decentralised finance and NFT were included in the regulator's scope.
In July, the cryptocurrency industry and the DeFi sector sent an open letter to FATF with their regulatory proposals.
At the same time, the group noted the industry's desire to continue to engage with the FATF.
In March, the regulator proposed amendments to the guidelines for the cryptocurrency industry. According to the draft, decentralised finance and NFT were included in the regulator's scope.
In July, the cryptocurrency industry and the DeFi sector sent an open letter to FATF with their regulatory proposals.
Regulatory pressure could "stifle innovation", they said. Industry representatives called for an open dialogue through consultations and working groups.
In June 2019, the FATF decided to require bitcoin exchanges and other VASPs to comply with anti-money laundering and counter-terrorist financing rules similar to traditional financial companies.
Later, the organisation's president, Marcus Plyer, said guidelines for the crypto industry needed to be adjusted because many countries had not fully implemented the standards previously adopted.
In October 2020, a consortium of leading US cryptocurrency companies submitted a FATF compliance plan for its members.
Recall that at the end of February 2021, the regulator began accepting feedback for regulatory amendments.
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