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South Africa's Ministry of Finance proposed amendments to the Financial Intelligence Centre Act (FICA) for public comment. They aim to align FICA with the current International Standards of the Financial Action Task Force (FATF) as well as with recent legislative amendments. This will include new rules around virtual asset service providers (VASPs) including further responsibilities around which information they have to maintain and conducting due diligence on customers. https://www.fic.gov.za/Documents/Website%20Notice%20Consultation%20Paper%20re%20proposed%20amendments%20of%20schedules%20to%20the%20FIC%20Act%202001%20(Act%2038%20of%202001).pd

This David Siegel essay argues that, soon enough, we will start to talk about the real-world realization of the dream of a digitally native dollar. It then goes on to recommend that the US government create a task force whose goal is to overhaul the financial system we have today to better serve the 9-10 billion people who are coming this century. It starts with an overview, then presents 22 goals for the task force to achieve before we begin coding up a digital dollar infrastructure.

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

Bitmex is fast-tracking its user verification program in order to comply with regulatory requirements. Users must now be fully verified by November 5, 2020 to continue trading on the platform. The original deadline was February 21, 2021. Unverified users will not be able to open new positions after this date. They will also"not be able to withdraw funds from their Bitmex account without completing verification beginning December 4, 2020.

The U.S. Federal Reserve and the Financial Crimes Enforcement Network (FINCEN) proposed reducing the thresholds at which banks must collect and store fund transfer information, from $3,000 to $250 for any transfers that go outside the United States. The proposal would also widen the agencies' definition of "money" to explicitly include crypto-assets ("convertible virtual currencies"). https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20201023a.pdf

Twenty-five U.S.-based virtual asset providers (VASPs) have come together to publish a white paper on an industry-wide solution to travel rule compliance. The solution takes a centralized approach, setting up a "bulletin board" to locate counterparty information and point-to-point information transmission for the required data. In essence, the U.S. Travel Rule Working Group (USTRWG) is proposing a kind of hub through which they can identify customer information and use point-to-point communication channels to transmit that data.

"FTX has three different tiers of KYC requirements."

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.

A working group including U.S. crypto exchanges Bitgo, Bittrexis, Coinbase, Gemini and Kraken, are working on a joint solution for complying with Financial Action Task Force rules on sharing customer information via a peer-to-peer "bulletin board." Participants would share addresses on the board and, if another member claims an address, the two entities could then share data P2P to keep personal information out of the reach of hackers.

Bank of Canada Deputy Governor Tim Lane said that CBDC should have limits on how much anonymity it gives users, there would need to be a trade-off in terms of privacy were a CBDC to act as a replacement or complement to cash. A central bank should not issue CBDC that would increase the scope for illicit transactions to take place. The Bank of Canada has been exploring different CBDC infrastructure models to find an optimal balance between regulation and privacy, but CBDC would not be able to offer the same cash-like degree of anonymity on an unlimited scale.

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.

The U.K. Financial Conduct Authority (FCA) proposed broadening annual financial crime reporting obligations to include all crypto-asset exchanges and custodian wallet providers. The regulator says that by extending its reporting rules to a wider range of firms, it will be able to deepen its understanding of which firms may have intrinsic money laundering risks due to their activities. https://www.fca.org.uk/publications/consultation-papers/cp20-17-extension-annual-financial-crime-reporting-obligation

A new INTERPOL report has found the billion dollar mobile money industry in Africa is being exploited by organized crime groups - a trend only set to increase as the service is rolled out across the continent. The report presents an overview of the criminal exploitation of mobile money services, including fraud, money laundering, extortion, human trafficking and people smuggling, the illegal wildlife trade and terrorism. A lack of robust identity checks to verify users combined with a need for greater law enforcement resources and training on mobile money-enabled crimes have created a financial system distinctly vulnerable to criminal infiltration.

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.

Coinbase aims to sell its Coinbase Analytics services, including its "identity attribution" software, to the U.S Drug Enforcement Administration and the Infernal Revenue Service. Coinbase Analytics uses technology from Neutrino, a blockchain analysis startup that Coinbase acquired last year. Coinbase uses the product internally for compliance and global investigations. However, Coinbase Analytics data is fully sourced from online, publicly-available data, and does not include any personally-identifiable information for anyone, regardless of whether or not they use Coinbase.

A multinational alliance of industry leaders are collaborating on the development of PayID universal payment ID through the Open Payments Coalition. PayID aims to simplify the process of sending and receiving money globally - across any payment network and any currency. PayID is open-source, free, and simple to integrate into existing payment platforms. In addition, it provides an end-to-end travel Rule compliance solution for satisfying both FinCEN requirements and FATF recommendations.

The U.S. Department of Justice (DoJ) released a report examining the dangers posed by cryptocurrencies and its framework for how to mitigate these risks. It stipulates a number of cases where it will exert its authority over foreign actors, such as "where virtual asset transactions touch financial, data storage, or other computer systems within the United States", if they use cryptocurrency to import illegal products into the U.S. and if they "provide illicit services to defraud or steal from U.S. residents". This also applies to foreign entities that engage in money transmission in the country even if they are incorporated abroad. Additionally, the DoJ claims to have the authority to prosecute any foreign actors who use cryptocurrency to support terrorist activities. https://www.justice.gov/ag/page/file/1326061/download

Central banks and related authorities are increasingly publishing papers explaining what the design of a central bank digital currency (CBDC) might look like. In itemizing the various design choices available, they explain that any design will be constrained by the necessity to "comply with AML law." However, no such constraint exists in reality and the various central bank papers that bring this up do no cite any specific law or regulation. It seems to be a tic on the part of the paper authors who seem to be assuming there must be such a law and are thus artificially limiting their design choices.

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'.

De Nederlandsche Bank has granted AMDAX BV, an Amsterdam-based digital asset service company, the ability to operate under its jurisdiction. This marks the first time a digital asset company has been approved in the country following the introduction of the EU's 5th Anti-Money Laundering Directive (AMLD5) that saw many crypto related businesses close or leave the Netherlands.