On 7 July 2020, the Financial Action Task Force (FATF) issued a report to G20 Finance Ministers and Central Bank Governors regarding stablecoins.
The June 2019 revisions to the FATF Standards place anti-money laundering and counter-terrorism financing (AML/CFT) requirements on virtual assets and virtual asset service providers (VASPs).
The FATF report finds that stablecoins share many of the same potential money laundering / terrorist financing (ML / TF) risks as some virtual assets, by virtue of their potential for anonymity, global reach and layering of illicit funds. Depending on how they are designed, they may allow anonymous peer-to-peer transactions via unhosted wallets. The revised FATF Standards apply to stablecoins and will be considered to be a virtual asset or a traditional financial asset depending on its exact nature.
In the report the FATF proposes four actions:
- The FATF calls on all jurisdictions to implement the revised FATF Standards on virtual assets and VASPS as a matter of priority.
- The FATF will review the implementation and impact of the revised Standards by June 2021 and consider whether further updates are needed.
- The FATF will provide guidance for jurisdictions on stablecoins and virtual assets, as part of a broader update to its guidance for a risk based approach on virtual assets and VASPs. This will set out in more detail how AML/CFT controls apply to stablecoins, including the tools available to jurisdictions to address the ML / TF risks posed by anonymous peer-to-peer transactions via unhosted wallets.
- The FATF will enhance the international framework for VASP supervisors to co-operate and share information and strengthen their capabilities, in order to develop a global network of supervisors to oversee these activities.
Also on 7 July 2020, the FATF published a report regarding a 12 month review of the revised FATF Standards on virtual assets and VASPs.