Anti-Money-Laundering Watchdog Calls for Stronger Cryptocurrency Regulations
June 21 2019 - 6:53PM
Dow Jones News
By Kristin Broughton
The global standard setter for anti-money-laundering laws called
on countries to apply more scrutiny to virtual currency firms that
transfer customer funds.
The Paris-based Financial Action Task Force said Friday that
countries should adopt regulations requiring virtual currency
companies -- including exchanges and wallet providers -- to collect
information about their customers and share it with other
institutions, including other crypto firms, that receive fund
transfers.
The FATF, established three decades ago by the Group of Seven
leading nations, evaluates the policies countries have in place to
combat money laundering and terrorist financing.
The updated guidance, published Friday following a meeting in
Orlando, Fla., comes as financial regulators grapple with how to
regulate virtual currency firms.
U.S. policy makers this week said they would scrutinize plans by
Facebook Inc. to launch its own cryptocurrency, looking at issues
including anti-money-laundering controls. In prepared remarks for
an annual address to bankers in London's financial district, Bank
of England Gov. Mark Carney also said Facebook's Libra project
should be carefully vetted by regulators.
At the FATF meeting, U.S. Treasury Secretary Steven Mnuchin said
the guidelines will provide more transparency to markets that have
allowed financial criminals to transact anonymously.
"This will enable the emerging fintech sector to stay one step
ahead of rogue regimes and sympathizers of illicit causes searching
for avenues to raise and transfer funds without detection," Mr.
Mnuchin said, according to a copy of his prepared remarks.
In adopting what is known as the travel rule, the FATF will
require virtual currency companies to identify senders and
receivers involved in fund transfers, similar to the way banks
provide each other with customer information for wire transfers.
Additionally, the FATF guidance says countries should designate an
authority responsible for licensing or registering virtual currency
companies.
The FATF expects to incorporate the new guidance into its
assessment methodology in October, and then will begin assessing
countries' compliance, according to a spokesman.
Crypto companies across the globe may face hurdles in
implementing the new standards, according to executives who advise
the firms.
Among the challenges: Virtual currency companies currently don't
have a secure way to share customer information with each other,
similar to the way banks use the Swift interbank messaging network
for wire transfers, said Alma Angotti, managing director with the
global investigations and compliance practice at Navigant
Consulting in London.
And while some crypto companies have invested heavily in
compliance, others have a long way to go to build the systems
necessary for collecting and managing customer information, said
Michael Nonaka, co-chair of the financial services group at
Covington & Burling LLP.
"We don't know right now the extent to which the new rule will
pose difficulties," Mr. Nonaka said.
Write to Kristin Broughton at kristin.broughton@wsj.com
(END) Dow Jones Newswires
June 21, 2019 18:38 ET (22:38 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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