Virtual Assets and Anti-Money Laundering and Combating the Financing of Terrorism (2): Effective Anti-Money Laundering and Combating the Financing of Terrorism Regulatory and Supervisory Framework—Some Legal and Practical Considerations

FinTech Notes, October 14, 2021

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Canonical URL: Virtual Assets and Anti-Money Laundering and Combating the Financing of Terrorism (2): Effective Anti-Money Laundering and Combating the Financing of Terrorism Regulatory and Supervisory Framework—Some Legal and Practical Considerations

Authors: Nadine Schwarz, Kristel Poh, Ke Chen, Grace Jackson, Kathleen Kao, Maksym Markevych
Published: October 14, 2021
Series: FinTech Notes
DOI: https://doi.org/10.5089/9781513593821.063

Discusses the necessary anti-money laundering and combating the financing of terrorism (AML/CFT) measures and provides examples of practical solutions to implement them.
Based on the FATF standards and guidance, in particular those aspects that pertain to virtual assets (VA) and virtual asset service providers (VASPs).
Notes that references to specific products and projects are made for illustrative purposes only and do not constitute an endorsement.

In June 2020, the Financial Action Task Force (FATF) noted progress by public and private sectors in implementing standards for virtual assets (VA), including updates to national laws and development of solutions to assist with the travel rule.
Challenges remain:
- Many virtual asset service providers (VASPs) are only beginning to adopt the required AML/CFT measures.
- A number of jurisdictions are yet to implement the standards for VA.
- Jurisdictions that have implemented the standards are at the early stages of developing a supervisory regime for VASPs.
At the time of drafting, no country had been assessed against the new standards.
Many country authorities were in the process of establishing how best to incorporate the new standards in their AML/CFT framework.
For these reasons, the note does not refer to specific country examples.

Provides examples of practical solutions to implement AML/CFT measures (illustrative only).
Emphasizes legal and practical considerations for designing effective AML/CFT regulatory and supervisory frameworks for VA and VASPs.
Highlights the importance of aligning national frameworks with FATF standards and guidance pertinent to VA and VASPs.

Aimed at policymakers and authorities seeking guidance on AML/CFT measures for virtual assets and VASPs.
Serves as a FinTech Note to inform implementation approaches consistent with FATF standards.