On June 21, 2019, the Financial Action Task Force (FATF) released its guidance on the global regulation of cryptocurrency, including sharing of customer data among virtual asset service providers (VASPs). The FATF’s guidance represents the first step toward a global effort to combat money laundering utilizing virtual assets (VAs). Under the guidance, VASPs such as global crypto exchanges would gather and transfer customer data (i.e., originator and beneficiary information) when transferring funds or VAs between entities, a practice similar to the “travel rule” that currently applies to banks.
The guidance also states that:
- the threshold for VA occasional transactions above which VASPs are required to conduct customer due diligence is USD/EUR $1,000;
- VASPs should keep records of transactions and customer due diligence measures for at least 5 years;
- at minimum, VASPs should be required to be licensed or registered; and
- countries should identify, assess, and understand the anti-money laundering and combating the financing of terrorism (AML/CFT) risks emerging from VA activities and activities of VASPs.
The FATF is an inter-governmental policy-making body responsible for promoting the implementation of legal, regulatory and operational AML/CFT standards. While FATF guidance is not binding, if a country is deemed uncooperative with other member countries in its AML/CFT efforts, the FATF can put the nation on its “blacklist,” which could have a substantial effect on the nation’s ability to borrow from the international financial market. The FATF in an accompanying statement said that it will monitor the implementation of these requirements by its 37 member countries and conduct a 12-month review in June 2020.
