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In February 2021, the Financial Action Task Force (FATF) launched a new project to study and mitigate the unintended consequences resulting from the incorrect implementation of the FATF Standards. The project focuses on four main areas: de-risking; financial exclusion; undue targeting of non-profit organizations (NPOs); and curtailment of human rights. In October the FATF published a high-level synopsis of The a stocktake, that consolidates previous analysis of these phenomena by FATF and other stakeholders, including expert bodies, in order to identify and understand to what extent, and in what manner, these unintended consequences are occurring. During the next phase of this project, the FATF will identify and consider potential options to mitigate these unintended consequences.

The Financial Action Task Force (FATF) has agreed on an action plan to drive the "timely implementation" of its global standards for crypto. The FATF noted that many countries have failed to implement its norms, including the "travel rule," which requires virtual asset services providers (VASPs) to collect and share information of crypto transactions. FATF published its updated standards for crypto in 2019, but last June, it said only 11 of 98 surveyed jurisdictions were enforcing the travel rule and urged them to act faster. In that regard the FATF's plenary agreed to a road map to strengthen implementation of FATF standards on virtual assets and VASPs, which will include a stocktaking of global current levels of implementation to e published in the first half of 2024.

In a report to the G20 finance ministers and central bank governors, the Financial Action Task Force (FATF) said regulators need to cooperate to make measures such as the "travel rule" more effective. The organization will work to develop an international framework for authorities to coordinate and share information about virtual asset service providers (VASPs). The FATF also said it will be providing specific guidance on stablecoins for regulators at some future point.

The Financial Action Task Force (FATF) updated its 2019 Guidance for a Risk-Based Approach for Virtual Assets and Virtual Asset Service Providers (VASPs). The FATF standards require countries to assess and mitigate their risks associated with virtual asset financial activities and providers; license or register providers and subject them to supervision or monitoring by competent national authorities. VASPs are subject to the same relevant FATF measures that apply to financial institutions. This guidance is intended to help countries and VASPs understand their anti-money laundering and counter-terrorist financing obligations, and effectively implement the FATF's requirements as they apply to this sector. The guidance provides relevant examples and potential solutions to implementation obstacles.

The Financial Action Task Force (FATF) published a report on the state of effectiveness of global efforts to tackle money laundering, terrorist and proliferation financing. It reports that 76% of countries have "satisfactorily" implemented the FATF recommendations, compared to 36% in 2012. However, in distinguishing between "technical" compliance and "effectiveness," it finds that while 76% of countries are technically compliant, effectiveness sits at just 21%, indicating there is much more work to be done.

The Financial Action Task Force (FATF) renewed its request for countries to implement the "travel rule", explaining that "many" member states have failed to implement the rule. The rule requires virtual asset service providers (VASPs) to communicate the personally identifiable information (PII) of senders to the VASPs of recipients and vice versa whenever the amount transacted is above $1,000. FATF claims that the travel rule is a "key requirement to prevent funds being transferred to sanctioned individuals or entities", and noncompliance "creates significant loopholes for criminals to exploit". Closing the gaps in global regulation of virtual assets is an urgent priority.

The Financial Action Task Force (FATF) has agreed on how it will assess whether countries have taken the necessary steps to implement the crypto-related requirements. "Given the global nature of the virtual asset industry, it is essential that countries implement these requirements swiftly," the FATF emphasized.

The Financial Action Task Force (FATF) has identified certain behaviors and characteristics that serve as red flags for regulators trying to detect illegal or illicit transactions. One of the primary methods is to compare a user's transaction activity with that of their profile. This can include instances where a deposit or transaction amount is inconsistent with a user's available wealth or historical financial activity, perhaps signaling money laundering, a scam or a money mule. Other red flags include whether the person in question is much older than the average age of a crypto user, as well as if they have a criminal record or have been active on websites and public forums associated with illicit activity. Other red flags include instances where users send crypto to exchanges with no known KYC/AML checks, or where they are sending transactions that are just below the Travel Rule threshold. Regulators might also look at users who exchange digital assets on public and transparent blockchains (such as Bitcoin or Ethereum) for privacy coins, like monero or zcash, which obfuscate or withhold transaction activity from third parties. http://www.fatf-gafi.org/publications/methodsandtrends/documents/virtual-assets-red-flag-indicators.html

The Financial Action Task Force (FATF) has a plenary meeting scheduled on June 24 to assess the progress of Virtual Asset Service Providers (VASPs) worldwide in enforcing the organization's "travel rule". The guidelines are not legally binding, but they can be effective because any nation that does not comply with them by the deadline may be excluded from the global financial network. Out of the over 200 countries that make up the FATF, only 20 or so have issued regulations covering the travel rule, although the remaining countries are making significant progress, according to CoolBitX CEO Michael Ou.

"Eight FATF Recommendations were re-ranked in the 2021 Report, seven of which saw ratings increase. One FATF Recommendation pertaining to non-profit organizations saw its rating decrease from "Compliant" to "Partially Compliant". Following the 2021 Report, Canada is no longer Non-Compliant with any FATF Recommendation."

"The FATF Recommendations set out a comprehensive and consistent framework of measures which countries should implement in order to combat money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction. Countries have diverse legal, administrative and operational frameworks and different financial systems, and so cannot all take identical measures to counter these threats."

This FATF Guidance is intended to assist governments, regulated entities and other relevant stakeholders in determining how digital ID systems can be used to conduct certain elements of customer due diligence under FATF Recommendation 10.

The Financial Action Task Force (FATF) looks to be going after decentralized finance (DeFi) applications in their recent draft guidance released. When it comes to DeFi platforms, the FATF said its standards may not apply to the underlying software or technology, but entities involved with the decentralized application (DApp) such as owners or operators may now be considered virtual asset service providers (VASPs). Virtual asset (VA) escrow services, including services involving smart contract technology, brokerage services, order-book exchange services, advanced trading services, and custody providers will all considered VASPs.

The Financial Action Task Force (FATF) updated its Guidance on the risk-based approach to virtual assets (VAs) and virtual asset service providers (VASPs). These changes aim to maintain a level playing field for VASPs, based on the financial services they provide in line with existing standards applicable to financial institutions and other AML/CFT-obliged entities, as well as minimizing the opportunity for regulatory arbitrage between sectors and countries.

If the Financial Action Task Force (FATF) has its way, stablecoin payments networks will no longer be able to take a hands-off approach to knowing who their users are. In a July report to the G20, FATF suggested that "central developers and governance bodies of so-called stablecoins" should be treated either as financial institutions or as virtual asset service providers (VASPs). Hence, stablecoin platforms would probably have to abide by the FATF's Recommendation 10, which prohibits financial institutions from "keeping anonymous accounts or accounts in obviously fictitious names." Stablecoin platforms only currently apply customer due diligence to the small minority of users who purchase, sell and redeem stablecoins for fiat currency.

Jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the 'grey list'.

Chainalysis says It's unrealistic and bad to expect crypto exchanges to send KYC information to recipient platforms with every transaction, in response to a draft FATF recommendation.

As expected, the Financial Action Task Force (FATF) standards released Friday include a controversial requirement that "virtual asset service providers" (VASPs), including crypto exchanges, pass information about their customers to one another when transferring funds between firms.

CipherTrace and Shyft have launched a blockchain-based identity and attestation platform aimed to help crypto firms meet the new FATF "travel rule" while still maintaining user privacy. The firms will build KYC and AML ecosystem in which participating exchanges can securely transfer Proof of Knowledge without disclosing personally identifying information.

Virtual asset service providers may have to make quick decisions about how they will comply with the FATF.