FATF Urges Member Countries To Lead by Example in Implementing Travel Rule
The global financial watchdog FATF has urged countries to implement the travel rule in the legislation following the incomplete progress report
According to the Financial Action Task Force (FATF), 11 out of the 98 jurisdictions that responded have begun enforcing their anti-money laundering and counter-terrorism financing (CFT) criteria.
A report on the “Implementation of the FATF Standards on Virtual Assets and Virtual Asset Service Providers” was released on Thursday. It focused on adding the new principle that stated, In order to comply with the Travel Rule, the “great majority” of jurisdictions evaluated by the organization’s Global Network since June 2021 “still require considerable or moderate improvement.”
The FATF said that nations working to put these criteria into effect made “minimal progress” over the past year, with 29 out of 98 jurisdictions that responded reporting drafting legislation relating to the Travel Rule and 11 beginning enforcement.
A new FATF report on virtual assets finds only 29 out of 98 jurisdictions have passed the FATF ‘travel rule’ to ensure crypto firms verify who their customers are. FATF members should lead by example & introduce relevant legislation ASAP.
— FATF (@FATFNews) June 30, 2022
As per the global financial watchdog, “While around a quarter of responding jurisdictions are now in the process of passing the relevant legislation, around one-third (36 out of 98) have not yet started introducing the Travel Rule, This gap leaves VAs and VASPs vulnerable to misuse, and demonstrates the urgent need for jurisdictions to accelerate implementation and enforcement.”
The firm further added that the organisations of the private industry had made advancements in adding new solutions to back the compliance with the travel rule and applying these early steps ensures interoperability with other solutions. However, FATF hinted about The “high threat of ransomware operators utilising VAs to enable payments” and channelling illegal cash through Virtual Asset Service Providers, also known as VASPs, to suggest that these solutions be put into place as soon as possible.
The official statement regarding the travel rule by FATF stated: “Countries that have not introduced Travel Rule legislation should do so as soon as possible, and FATF jurisdictions should lead by example by promoting implementation, and by sharing experiences and good practices, Rapid implementation by jurisdictions will incentivize progress further.”
Under the guidelines of the FATF, VASP operations in defined jurisdictions need to be registered. The organisation reported in its previous April update that only 120 countries which are not even half of the assessed jurisdictions had complete laws and regulatory standards in place. For the assessment of the threats and verification of the beneficial owners of companies, the firm has also recommended prioritizing the detecting and reporting of data in the crypto transactions.