Crypto Rules Against Money Laundering Unofficially Mandated by Financial Action Task Force: Details

FATF’s ‘grey list’ names those countries that are under increased monitoring by the global financial watchdog.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 8 November 2022 11:45 IST

Crypto Rules Against Money Laundering Unofficially Mandated by Financial Action Task Force: Details

Photo Credit: Pixabay/ Sergei Tokmakov

FATF has identified the UAE and the Philippines for not strictly maintaining crypto laws

Highlights

FATF’s plan of action likely to go into effect around next year
Bring on the FATF’s grey list could impact the financial rankings of affe
Crypto’s use in money laundering is a matter for concern in India as well

The misuse of cryptocurrencies in the illegal laundering of money has been a matter of concern for India and many other nations for a while now. Under the circumstances, the focus on driving the adoption of global rules against crypto-linked money laundering rules has become top priority for the Financial Action Task Force (FATF). The Paris-based global financial watchdog has, in a way, unofficially mandated countries to abide by its anti-money laundering (AML) regulations to avoid being ‘grey listed'.

FATF's ‘grey list' names those countries that are under Increased monitoring by the global financial watchdog.

The FATF is planning to hold annual checks across nations to make sure that each of them is enforcing preventative rules against the use of crypto in money laundering and terror financing, Al Jazeera reported citing officials familiar with the development.

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As per the FATF guidelines, the governments of several countries need to collect identificatory information on the senders, recipients, and beneficiaries of virtual assets. The regulations also ask all virtual assets service providers (VASPs) to be registered and licenced within the countries.

Back in March, the FATF had reportedly observed ‘strategic deficiencies' in maintaining anti-money laundering rules by countries including the UAE, Cayman Islands, as well as the Philippines.

The findings have forced the FATF to tighten the noose around other nations that are experimenting with crypto activities.

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The failure to comply with FATF's anti money laundering guidelines could impact the overall rating of the countries on the global index. This could cause some nations to automatically fall among the more monitored ones and lose certain global financial privileges and facilitations.

In the coming days, India will be taking up the presidency of the G20 group and will continue to preside the international union for the next one year.

Finance Minister Nirmala Sitharaman said that no one country can handle and formulate effective rules to safeguard crypto assets from prevalent market volatility as well as the exploit cases of digital assets, on its own.

Since cryptocurrencies are not governed by any central bank or a regulatory body, they are often misused for transferring large amounts of money to cross border locations, under a shroud of anonymity.

In her speech at the recent press briefing, Sitharaman noted that the use of crypto in money laundering is a problematic issue linked with digital assets.

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Further reading: Cryptocurrency, FATF, Financial Action Task Force, Crypto Rules, Money Laundering

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More