Countries that do not adhere to Anti-Money Laundering (AML) guidelines for cryptocurrencies could find themselves added to the Financial Action Task Force (FATF) “gray list”.
According to a report by Al Jazeera on November 7, sources say that the global financial watchdog plans to conduct annual checks to ensure that countries are applying AML/CFT rules to crypto service providers.
The gray list refers to the list of countries that the Financial Action Task Force considers to be “jurisdiction under increased scrutiny.”
The FATF says the countries on this list have committed to resolving their “strategic deficiencies” within agreed timeframes and are therefore subject to further monitoring.
It differs from the FATF’s “blacklist”, which indicates countries with “significant strategic deficiencies with regard to money laundering”, a list that includes Iran and North Korea.
Currently, 23 countries are on the gray list, including Syria, South Sudan, Haiti, and Uganda.
Crypto hotspots such as the UAE and the Philippines are also greylisted, but according to the Financial Action Task Force (FATF), both countries have made a “high-level political commitment” to work with the global financial watchdog to strengthen anti-money laundering and anti-money laundering efforts. terrorist financing system.
Pakistan was also previously on the list, but after taking 34 measures to resolve FATF concerns, it is no longer subject to further monitoring.
An anonymous source cited by Al Jazeera noted that while non-compliance with crypto AML guidelines would not automatically put a country on the FATF gray list, it could affect its overall rating, prompting some to fall into overwatch.
Cointelegraph has reached out to FATF for comment but they declined to discuss Al Jazeera’s allegations.
However, the FATF media team noted in a statement that “comprehensive implementation of FATF standards by countries to regulate crypto assets remains very weak.”
“All countries need to prioritize the rapid and effective implementation of encryption systems to ensure that they are not misused by criminals, terrorists and sanctions evaders.”
The statement also noted that the FATF did not change the method or frequency of its assessments in relation to Recommendation 15 (R.15), which requires that Virtual Asset Providers (VASPs) be regulated, licensed, registered, and subject to effective systems of monitoring or oversight.
“Implementation of Recommendation 15 remains a priority for the Financial Action Task Force, and the Financial Action Task Force will continue to explore and take action to enhance compliance.”
In April 2022, the Anti-Money Laundering (AML) watchdog reported that many countries, including those with Virtual Asset Service Providers (VASPs), are not complying with its standards on combating the financing of terrorism (CFT) and combating money laundering.
Under Financial Action Task Force (FATF) guidelines, VASPs operating within certain jurisdictions must be licensed or registered.
In March, it found that several countries had “strategic deficiencies” in AML/CFT, including the United Arab Emirates, Malta, the Cayman Islands, and the Philippines.
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In October, Svetlana Martynova, counter-terrorist financing coordinator for the United Nations (UN), noted that cash and hawala were the “mainstream methods” of financing terrorism.
However, Martynova also highlighted that technologies such as cryptocurrencies have been used to “create opportunities for abuse.”
she said during a “special meeting” of the United Nations on October 28.
Update November 11th, 4:40am UTC: Added statement from the Financial Action Task Force.