Expert Takes: Implications Of New FATF Guidelines For Virtual Assets

Blockchain, News, Opinion, Regulation | March 23, 2021 By:

The Financial Action Task Force (FATF), a global anti-money laundering watchdog, has released an updated guidance on digital assets and virtual asset service providers (VASP).

Some important changes in the updated guidance are as follows:

  • DEXs or decentralized/non-custodial crypto exchanges and crypto-asset escrow services are considered Virtual Asset Service Providers (VASPs)
  • Stablecoins are virtual asset (VAs) and FATF Standards apply to these financial instruments
  • Only non-fungible tokens or NFTs that are able to potentially carry out money laundering (ML) and terrorism financing (TF) activities may be considered VAs
  • VASPs need to “assess and mitigate” proliferation financing (PF) risks
  • “Best practices” for counterparty VASP due diligence
  • Options for “mitigating peer-to-peer transaction risks”
  • Updated Travel Rule “clarifications and guidance”

The FATF guidance has clarified the definitions of Virtual Assets and Virtual Asset Service Providers.

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