The Financial Action Task Force (FATF), a UN agency committed to combating money laundering and terrorist financing, has again urged member nations to enact its “Travel Rule” to mitigate risks posed by cryptocurrencies.
Despite its introduction in 2019 and update in 2022, the rule has seen weak adoption among members, exposing potential regulatory gaps.
According to FATF, more than half of the members surveyed have not taken steps towards implementing the rule, intended to curb the anonymity of illegal crypto transactions.
These statistics indicate a significant gap in regulatory compliance, with the FATF highlighting that current non-compliance allows criminals to exploit “significant loopholes”.
In a bid to encourage wider adoption, FATF stressed the urgent need for countries to institute Anti-Money Laundering and Counter-Terrorism Financing measures in the cryptocurrency sector.
As of March 2022, only 29 of 98 jurisdictions passed the requirements of the travel rules, with only a small fraction of these jurisdictions commencing enforcement.
In the recent FATF meetings held in Paris, the members agreed to further updates to the rules.
As part of its continuous efforts to enhance compliance, FATF will publish a report on June 27, providing recommendations for member countries to close these regulatory loopholes.
The report will address North Korea’s illicit virtual asset activities, where it’s alleged that stolen funds are funneled into its Weapons of Mass Destruction program.
Other “emerging risks,” including stablecoins, decentralized finance, nonfungible tokens and peer-to-peer transactions, will also be covered.
Overall, FATF’s recent call reflects its commitment to ensuring a safer cryptocurrency environment and underscores the need for countries to take swift action to enforce regulation and prevent financial crimes.
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