FATF Plenary Meeting Seeks To Improve Understanding Of Virtual Currency Risks


February 27, 2018 12:55 AM

This past week, the Financial Action Task Force on Money Laundering gathered for a plenary meeting. Unsurprisingly, virtual currency was part of the conversation.

From February 21 through February 23, 2018, the Financial Action Task Force on Money Laundering (FATF) met in Paris for its second plenary meeting under the presidency of Santiago Otamendi, secretary of justice at Argentina’s Ministry of Justice and Human Rights. The intergovernmental organization’s agenda included a segment dedicated to the improved understanding of virtual currency risks. However, the cryptocurrency portion seems like it was lost among the group’s other priorities.

The group published a set of “outcomes” of the meeting, which stated that FATF discussed its report to the G20 finance ministers and central bank governors, touching upon the risks and opportunities of FinTech, RegTech, and virtual currencies. Furthermore, FATF examined a report on the anti-money laundering (AML) and counter-terrorist financing (CTF) risks associated with virtual currencies as well as the regulatory measures taken by various countries. Neither report was available on the FATF website.

“The improved understanding of the misuse and risk of virtual currencies will lead to FATF undertaking additional work streams,” the outcomes explained. Although the group boasts 37 member entities, FATF simply issues recommendations and monitors the progress of member states through “peer reviews,” so it would appear that conversations remained superficial. FATF calls itself a policy-making body, which “works to generate the necessary political will to bring about national legislative and regulatory reforms” related to “money laundering, terrorist financing, and other related threats to the integrity of the international financial system.”

When president Otamendi set priorities for FATF (2017 – 2018) he expressed concern about possible links between virtual currency and terrorism. He called for a focus on “the methods terrorists and terrorist organisations use to fund their recruitment efforts and on the use of new payment products and technology (including virtual currencies) to finance terrorism and spread radicalisation.” There have been reports of North Korea hacking cryptocurrency exchanges and ties between ISIS and bitcoin, but it’s difficult to determine the scope of cryptocurrency-funded terrorism.

FATF was most recently mentioned in US regulatory affairs during a January 2018 hearing on combating money laundering and illicit finance. Addressing the US Senate Committee on Banking, Housing, and Urban Affairs, Heather Lowe, legal counsel and director of government affairs for Global Financial Integrity, said that FATF was examining how cryptocurrencies fit into the broader regulatory picture.

Matthew is a writer with a passion for emerging technology. Prior to joining ETHNews, he interned for the U.S. Securities and Exchange Commission as well as the OECD. He graduated cum laude from Georgetown University where he studied international economics. In his spare time, Matthew loves playing basketball and listening to podcasts. He currently lives in Los Angeles. Matthew is a full-time staff writer for ETHNews.

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