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The Financial Action Task Force on Money Laundering (FATF) has called on countries to implement a “travel rule” to combat money laundering and terrorist financing through cryptocurrencies.
On June 23, the United Nations body whose role is to promote strategies to combat money laundering and terrorist financing explained that “many” member states do not comply with this rule.
The call came after a series of FATF meetings at its headquarters in Paris.
The FATF plenary has concluded. Delegates of governments from around the world discussed a range of money laundering and terrorist financing issues.
— FATF (@FATFNews) June 23, 2023
The FATF said that “more than half” of respondents in the survey said they had taken no action to implement the rule:
“More than half of respondents have taken no steps to implement the Travel Rule, a key FATF requirement to prevent the transfer of funds to individuals or entities under sanctions.”
The FATF called on countries to “immediately” implement anti-money laundering (AML) and counter-terrorist financing (CTF) measures against cryptocurrency-related activities to prevent “criminals” from exploiting “significant loopholes” that are not protected by law.
A survey by FAFT in March 2022 found that only 29 of 98 jurisdictions at the time met the requirements required under travel regulations, and a small fraction of those jurisdictions began to enforce them.
The FAFT travel rule was implemented to ensure the anonymity of illegal cryptocurrency transactions. It was introduced in June 2019 and was last updated in June 2022. FATF members agreed to further update the rules at their meetings.
Lack of regulation of virtual assets in many countries creates opportunities that criminals and terrorist financiers exploit.
The FATF is closely monitoring global implementation of its strengthened requirements for virtual assets.
Learn more➡️https://t.co/rDuXbjpJh7#FATF pic.twitter.com/3HuZIbT4ZK
— FATF (@FATFNews) June 21, 2023
FAFT said it would release a report on June 27 urging member countries to implement its recommendations to close loopholes it says criminals are trying to exploit.
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The report will mention North Korea’s illegal activities with virtual assets, where the stolen funds are then allegedly channeled into its weapons of mass destruction program, according to FAFT.
The report will also discuss illicit activities associated with other “emerging risks” such as stablecoins, decentralized finance, non-fungible tokens (NFTs), and peer-to-peer transactions.