Virtual Assets Targeted Update on Implementation of the FATF Standards on Virtual Assets and Virtual Asset Service Providers

The Financial Action Task Force (FATF) has released a report on the implementation of its anti-money laundering and counter-terrorist financing (AML/CFT) measures for virtual assets (VAs) and virtual asset service providers (VASPs). The report finds that jurisdictions continue to struggle with fundamental requirements such as undertaking a risk assessment, enacting legislation to regulate VASPs, and conducting a supervisory inspection. In addition, jurisdictions have made insufficient progress on implementing the Travel Rule, which is a key AML/CFT measure.

The FATF calls on all countries to rapidly implement the FATF's Standards on VAs and VASPs, including the FATF's Travel Rule. The FATF will continue to conduct outreach and provide assistance to low-capacity jurisdictions, identify and publish steps FATF member jurisdictions and other jurisdictions with materially important VASP activities have taken towards implementing R.15/INR.15, facilitate sharing of findings, experiences, and challenges including relating to DeFi, unhosted wallets, and P2P, and conduct a further review on progress and remaining challenges for implementation by June 2024.

Here are the key takeaways from the report:

1. Jurisdictions continue to struggle with fundamental requirements for AML/CFT compliance for VAs and VASPs.

2. Progress on implementing the Travel Rule has been insufficient.

3. The FATF calls on all countries to rapidly implement the FATF's Standards on VAs and VASPs, including the Travel Rule.

4. The FATF will continue to monitor the illicit financing risks and developments in the VA and VASP sector.