The Financial Action Task Force (FATF) is intensifying its pressure on virtual asset service providers (VASPs) and countries to accelerate the implementation of its rules on digital assets, as only a quarter of responding jurisdictions are currently making efforts to pass legislation to implement the organization’s key requirement, indicates the organization’s recent report.
The FATF is an inter-governmental entity established in 1989 to set standards and promote measures to combat money laundering, terrorist financing, and related threats to global finance.
The vast majority of jurisdictions overseen by the FATF have not yet fully implemented the organization’s R.15/IN.15 requirements which set the global anti-money laundering (AML) and counter-terrorist financing (CTF) standards for virtual assets and VASPs, according to the report.
“Of the 53 jurisdictions that have been assessed by the FATF’s Global Network since June 2021, the majority still require major or moderate improvements on R.15, with improvements particularly needed on assessing ML/TF [money laundering / terrorist financing] risks, and the application of AML/CFT preventative measures,” the task force said.
In its report, the organization stresses the urgent need for jurisdictions to implement and enforce the so-called Travel Rule, a key FATF requirement that allows the private sector to comply with sanctions requirements and detect transactions considered to be suspicious.
“Over the last year, jurisdictions have made only limited progress in introducing FATF’s Travel Rule,” according to the report, adding:
“As of March 2022, while 29 out of 98 responding jurisdictions reported having passed Travel Rule legislation, only 11 jurisdictions have started enforcement and supervisory measures.”
While about 25% of responding jurisdictions are now in the process of passing relevant legislation on the Travel Rule, 36 out of 98 have not yet commenced to introduce the Travel Rule, the FATF said.
The organization recognizes that, over the last year, the private sector has made progress in facilitating Travel Rule implementation, but it “needs to further strengthen interoperability between solutions, and to ensure full compliance with the FATF Standards, to enable global implementation.”
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