The Financial Action Task Force (FATF), an intergovernmental organization tasked with combating threats to the integrity of the international financial system, has urged its members to regulate virtual assets.
Released on FATFs website, the organization’s recommendations on virtual assets regulation will be formally adopted as part of the FATF Standards in June 2019.
The draft regulation begins with a suggested classification of virtual assets as “property,” “proceeds,” “funds”, “funds or other assets,” or other “corresponding value” and a recommendation to apply regulations to both those assets and their providers – virtual asset service providers (VASPs).
FATF recommends that VASPs should be required to obtain licenses or become registered, at least in the jurisdiction where they were created, or in jurisdictions where they offer services and/or services to customers, with unlicensed or unregistered providers exposed to “appropriate sanctions.”
However, already licensed financial institutions permitted to perform VASP activities and subject to FATF-recommended obligations, need not be separately licensed.
FATF urges its members to ensure that VASPs activities are under risk-based supervision of a competent authority and comply with AML/CFT. The supervisors should have a set of disciplinary tools at its disposal “including the power to withdraw, restrict or suspend the VASP’s license or registration, where applicable.
FATF recommends that sanctions be applied not only to VASPs but to their directors and senior management as well. The organization also urges cooperation and prompt exchange of information between members in order to tackle money laundering and terrorist activities financing.
FATF was formed in 1989 and currently gathers 35 countries: Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Greece, Iceland, India, Ireland, Israel, Italy, Japan, Republic of Korea, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Portugal, Russian Federation, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the UK, and the US, as well as Hong Kong, the European Commission and the Gulf Cooperation Council.