Updated Guidance for a risk-based approach to virtual assets and virtual asset service providers
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The virtual asset sector is fast-moving and technologically dynamic, which means continued monitoring and engagement between the public and private sectors is necessary. The FATF issued a Guidance in June 2019, following the revisions to the FATF Recommendations in October 2018 and June 2019, in response to the increasing use of virtual assets for money laundering and terrorist financing. The FATF strengthened its standards to clarify the application of anti-money laundering and counter- terrorist financing requirements on virtual assets and virtual asset service providers (VASPs). Countries are now required to assess and mitigate their risks associated with virtual asset financial activities and providers; license or register providers and subject them to supervision or monitoring by competent national authorities. VASPs are subject to the same relevant FATF measures that apply to financial institutions.
The Guidance was updated in October 2021. It is intended to help both national authorities in understanding and developing regulatory and supervisory responses to virtual asset activities and virtual asset service providers, and to help private sector entities seeking to engage in these activities, in understanding their AML/CFT obligations and how they can effectively comply with these requirements.
The updated Guidance forms part of the FATF’s ongoing monitoring of the virtual assets and VASP sector. The updated Guidance, which benefited from dialogue with the private sector, also includes examples of national approaches to regulating and supervising virtual asset activities and VASPs to prevent their misuse for money laundering and terrorist financing. In particular, it focuses on the following six key areas: i) clarification of the definitions of virtual assets and VASPs; ii) guidance on how the FATF Standards apply to stablecoins; iii) additional guidance on the risks and the tools available to countries to address the money laundering and terrorist financing risks for peer-to-peer transactions; iv) updated guidance on the licensing and registration of VASPs; v) additional guidance for the public and private sectors on the implementation of the “travel rule”; and vi) principles of information-sharing and co-operation amongst VASP supervisors.