FATF Upgrades Guidelines on Risk-Based Approach for VA/VASPs
FATF (Financial Action Task Force) is upgrading the regulations regarding the risk-based approach for Virtual Assets and Virtual Asset Service Providers (VASPs).
These guidelines were originally published in 2019 as FATF applied changes to its Standards and set Anti-Money Laundering (AML) and Counter-terror Financing (CFT)
Restrictions on VAs and VASPs. Since 2020, FATF is determined to upgrade these guidelines as reported in its 12-month review report.
The revised guidance upgrades the following areas:
- VAs and VASPs definition to be clarified
- Detail guidelines regarding the FATF Standards to Stablecoins
- Give proper guidance on the risks and risk mitigants for P2P transactions
- Update on the guidance for VASPs registration
- Travel rule guidance and their implementation for the public as well as private sector
- Principles of Information-Sharing and Co-operation must be included amongst VASPs Supervisors.
These guidelines have been upgraded to reflect the publication of relevant reports by FATF. The aim for these changes in the pre-existing guidances was to maintain fairness for Virtual Asset Service Providers (VASPs). This is based on the financial services that are provided by these service providers along with the existing regulations that must be applied to financial institutions and other business entities obliged to comply with AML/CFT regulation. This will also assist in lessening the opportunity for regulatory arbitrage between sectors and countries.
The Financial Action Task Force has now opened this guidance for public commenting. They are hoping to get a consultation from private sector stakeholders before settling on the revision of the guidance. They are open to views on the focused areas along with the particular proposals on the proposed revisions. They are looking to gather views from the VA community representatives, academics, policy bodies, technology developers of VASPs, VASPs service providers, other entities that must comply with the financial regulations like banks, and authoritative figures or organizations.
Other than the public consultation, Financial Action Task Force is also pondering over the implementation of the FATF standards that were revised regarding the VAs and VASPs and to see, after another 12-month review, if more updates are required. If some relevant issues are found through this public consultation, that is not a part of this project, will be considered through a second review. FATF plans on considering the report in June 2021. The current draft of guidance has not been approved as of yet and implementations or amendments will be considered in June 2021.
