In February 2019, FATF issued its proposed recommendations for AML governance of the crypto industry. Under pressure from the international community, the FATF aimed to bring amendments to Recommendation 15 (New Technologies) into force at the June 2019 plenary. Within the proposals, one point was opened for consultation; colloquially known as 7(b) the proposal seeks to introduce wire transfer recommendations required of the traditional banking sector into the crypto industry. That is, originator and beneficiary information is collected, screened and transmitted between correspondent institutions with the objective to prevent criminals and terrorists having unfettered access to the financial system.
The crypto industry responded but not for the reason many thought; the response was not to fight against regulation or kick the can down the road for another day but to make sure that the regulation could be effective.
Virtual Currencies (VC) have come a long way in the 10 years since Bitcoin first emerged, born out of the financial crises and now a decade later they are considered part of the financial landscape. With more than 1,000 VC’s to choose from, tens of millions of customers use VC whether as a store of value, unit of account and/or as a payment medium. As with any currency, there are those minorities that use it to further illicit acts. Criminals have recognised that VC has unique properties that could potentially serve their interests in laundering illicit funds and evading law enforcement. Users of VC employ pseudonyms rather than names, funds can be transferred without intermediaries and across international borders as easily as sending email.