On 27 June 2023, the Financial Action Task Force (FATF) published a report, Targeted update on implementation of the FATF standards on virtual assets and virtual asset service providers.
In October 2018, the FATF updated Recommendation 15 (R.15) to extend anti-money laundering / countering the financing of terrorism (AML/CFT) requirements to virtual assets (VAs) and virtual asset service providers (VASPs). In June 2019, the FATF adopted an Interpretative Note to R.15 in order to further clarify how the FATF requirements apply to VAs and VASPs. Following this, the FATF has carried out work to identify and address gaps in implementation, provide guidance to jurisdictions to facilitate implementation and monitor emerging risks in the VA sector.
This latest report is FATF’s fourth report on the global implementation of the FATF’s Standards on VAs and VASPs. It provides an overview of global implementation of R.15, outlines challenges in implementing the FATF Standards, shares suggested solutions or progress made by the public and private sectors, and provides an overview of merging risks relating to VAs and how jurisdictions and industry are responding to these risks.
Key findings in the report include:
- Global implementation is relatively poor and compliance remains behind most other financial sectors. Based on 98 FATF mutual evaluation and follow up reports since the standards on VAs and VASPs were adopted, three quarters of jurisdictions are only partially or not compliant with the FATF’s requirements.
- Jurisdictions continue to struggle with fundamental requirements – out of 151 respondents to a March 2023 survey on R.15 implementation over one third (52 out of 151) have not conducted a risk assessment.
- Jurisdictions have made insufficient progress on implementing the Travel Rule, leaving VAs and VASPs vulnerable to misuse.
- The private sector now offers a range of technological tools to enable VASPs to implement the Travel Rule. However, these tools generally do not fully comply with all the FATF’s Travel Rule requirements.
The FATF will continue to work in this space. In February 2023, it adopted a roadmap through to June 2024 to improve implementation of R.15.