Addendum to the FATF (The Financial Action Task Force) Recommendations

At the end of last week, the FATF (The Financial Action Task Force), an intergovernmental organization that develops global standards for combating money laundering and terrorism financing, published an addendum to its Recommendations, 2012. Innovations are aimed at the regulation of activities related to virtual assets.

The new edition of the Recommendations provides for the definition of the provisions “Virtual Assets” and “Virtual Asset Services Providers”.

Thus, the Virtual Assets in the Recommendations meaning is a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes. FATF separates the concept of “virtual assets” from the digital representations of of fiat currencies, securities and other financial assets.

Virtual Asset Services Providers services means any natural or legal person that perform the following operations on behalf of third parties:

  • Exchange between virtual assets and fiat currencies;
  • Exchange between one or more forms of virtual assets;
  • Transfer of virtual assets;
  • Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; and
  • Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

Considering that virtual assets create new opportunities for laundering funds obtained by illegal means, as well as for financing terrorism, FATF calls on all countries to take legal and practical measures to prevent abuse of virtual assets, noting that a number of states have already implemented the FATF Guidelines into their legislation, 2015 (Guidance on AML/CFT-related data and statistics and Guidance for a risk-based approach).

Given the authority of FATF in the world arena, in the near future we should expect a wave of regulatory activity not only among FATF member countries, but also other countries.

 

Dmitriy Zelenko

associate, IT practice