The Financial Action Against Money Laundering Group (FATF) has decided to tighten regulation of the cryptomoeda sector, in particular, to compel bitcoin stock exchanges and other cryptographic service providers (VASPs) to comply with AML and CFT procedures the financing of terrorism) similar to traditional financial firms.
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Thus, despite criticism of proposals and warnings about the adverse consequences for the industry, the group decided that bitcoin exchanges should exchange user data when transacting between sites.
VASPs should provide each other with the following data:
- the name of the sender and the data in your digital wallet;
- the name of the recipient and the data in your digital wallet;
- physical address of the sender, your passport or user ID, which links you to the company, date, or place of birth.
Regulators of member countries of this intergovernmental organization will have to ensure compliance with these requirements and ensure that all VASPs share and store such information. Businesses and governments have exactly 12 months to implement the recommendations, and the first FATF test will take place in June 2020.
Many analysts, including the company Chainalysis, have tried to convince FATF that in the blockchain industry it is quite difficult, if possible, to meet the same banking industry standards. They have alerted the organization that a cryptomoeda business may enter partially into the shadows, and user privacy and the effectiveness of law enforcement operations may be impaired.
However, now any cryptographic service provider, an individual or a legal entity, will have to undergo a licensing or registration procedure in their jurisdiction. Thus, according to the FATF, competent authorities will have to make sure that offenders are not the beneficiaries of VASP.
If the service provider wants to change the ownership structure or the organization of the business, it will need to obtain approval from the regulator.
It is worth mentioning that the FATF recommendations touched and mixed services. Therefore, VASPs should mitigate the risks associated with these transactions, which obfuscate senders and recipients, and if this is not possible, providers should not be allowed to do so.
In addition, the VASPs should freeze the funds of the users that are included in the penalty lists.
It should be noted that there are 37 member countries in the FATF and they are not required to follow the recommendations, however in this case they will be blacklisted and face a foreign investment exit.
Recall earlier in the Russian Federation they prepared proposals for the regulation of cryptomoeda in accordance with the requirements of the FATF.
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