The Financial Action Task Force (FATF) Plenary recently highlighted the importance of collective efforts to combat proliferation, terrorism financing, and money laundering. The FATF members agreed to release an update on implementing recommendations for virtual assets and virtual asset service providers. However, the FATF found that many jurisdictions were only partially compliant or non-compliant with these measures, highlighting the need to strengthen crypto standards.
During the meeting, the FATF commented on Luxembourg as an international financial center, stating that it had met the technical conditions set by the FATF but still needed improvement in several areas, such as recognizing and prosecuting complex money laundering cases. The organization is closely monitoring countries like Cameroon, Croatia, and Vietnam to address strategic flaws in their anti-money laundering systems.
The Plenary stressed the urgent need for global regulation of virtual assets and VASPs, as the implementation of FATF measures in this area remains relatively poor. Around 75% of jurisdictions are either non-compliant or marginally compliant, with some governments failing to implement basic rules like the Travel Rule, which prevents funds from being transferred to sanctioned individuals or organizations.
The FATF plans to release a report on June 27, urging nations to implement its recommendations to address these loopholes. The organization also aims to strengthen asset recovery measures and enable nations to freeze, seize, and confiscate illegal proceeds. This is in response to growing concerns about North Korean cryptocurrency hackers and their use of IT know-how to finance military goals and evade international sanctions.
The FATF intends to authorize a set of adjustments by October 2023 and calls on its members and other governments to swiftly enact regulations against money laundering and terrorism financing. In the first half of 2024, the organization will release a table outlining the actions taken by countries regarding virtual assets and the FATF’s recommendations.
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