Financial Action Task Force on Money Laundering (FATF), an international intergovernmental organization created to combat money laundering has recently issued guidance in the form of a report titled ‘Guidance for a Risk-Based Approach to Virtual Currencies’ for closer monitoring of cryptocurrency exchanges. The report discusses about various benefits associated with digital currencies and also the potential risks of money laundering and terror financing it comes along with.
The report was published as part of the recently concluded plenary meeting held at Brisbane. The organization with thirty four member nations and two regional organizations – European Union and the Gulf Co-operation Council is currently headed by Australia. The 48 page report targets digital currency exchanges described as ‘virtual currency payments products and services’ to be the gateways for potential money laundering. It calls for close monitoring of such players to identify potential risks and take necessary actions.
FATF also urges its member nations to get a better understanding of digital currency and exchanges as it will help their respective governments to conduct better risk assessments and allocate resources according to their requirements. FATF calls for the members to introduce regulations and licensing norms for these digital currency exchanges on par with that of conventional financial institutions.
It has also recommended the digital currency exchanges and businesses to have due diligence processes similar to banks and financial institutions. It can be notices that most of the bitcoin exchange have already incorporated Anti Money Laundering (AML) and Know Your Customer (KYC) regulations in place. However, if the countries end up introducing counterproductive regulations against bitcoin and other cryptocurrencies, it will seriously hamper further development of Bitcoin technology. We have already seen the effect BitLicense is having on Bitcoin based start-ups in New York State. Few companies have already withdrawn their operations in New York State are due to BitLicense requirements.
READ MORE: BitLicense Shoots Down Another Bitcoin Company in New York
UK has favourable regulations set in place of digital currency companies while Canada has decided to go soft on bitcoin by not introducing any harsh measures in the name of regulations. We have to wait for the FATF report to sink in and look for any changes in regulations and policies towards bitcoin in the coming days.
READ MORE: UK Bitcoin Users In Favor Of Regulation
