The Financial Action Task Force (FATF) urged countries to enhance regulation of virtual assets and ensure compliance with its 2018 standards on virtual assets.
The FATF said during its latest Plenary meeting in Paris that many countries have failed to develop and adhere to its recommendations after almost five years since it made them. It added that most countries had not implemented its “travel rule” that mandates holding originator and beneficiary information — among other details of virtual asset transactions.
The watchdog said the lack of regulation of virtual assets allows criminal and terrorist financiers to exploit the system for their own needs — especially in the case of ransomware attacks, where criminals are able to steal vast sums and get away without detection or repercussions.
The FATF said that its analysis of ransomware attacks showed that these criminals mainly use virtual assets to launder the ransom payments as they have “easy access” to virtual asset service providers across the globe. The regulator said that jurisdictions with weak anti-money laundering and terrorist financing checks are of particular concern as they create opportunities that criminals can exploit.
The FATF said that countries need to strengthen regulatory cooperation across borders and share more information in order to tackle the issue effectively. Additionally, national authorities need to develop tools to help trace and recover stolen virtual assets, which will require them to collaborate with cyber security and data protection agencies.
The FATF said it has established a new roadmap to “strengthen” the implementation of its standards on virtual assets and will report on the steps FATF member and FSRB countries have taken to regulate virtual assets and virtual asset service providers in the first half of 2024.
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