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FATF: The US has not focused much on hedging crypto-financial risks

The FATF International Organization for the Prevention of Money Laundering and the Financing of Terrorism (AML and CFT) has organized a re-evaluation of the US on the implementation of recommendations related to AML and CFT. After reviewing and publishing the report on Tuesday (March 31), they indicated that currently the US is only implementing the majority of recommendations for cryptocurrencies and virtual assets. Recommendation 15, closely related to cryptocurrencies, is one of the most talked about in this report.

The US class classification since the 2016 assessment has not changed in the FATF ranking. However, the regulation related to cryptocurrencies is still changing in October 2019 called “Travel Rule”.

As a result, this review will reflect changes in practice including being subject to greater scrutiny than before.

The US regulations are not detailed, but mostly effective

The FATF report highlights the increased awareness of risks by US regulators. This is demonstrated through activities such as the establishment of several task forces and through the report “National Money Laundering Risk Assessment 2018”.

The US regulations also apply to virtual asset service providers (VASPs) including FATF-certified exchanges and custodians. However, FATF also notes that it does not deal with VASPs that are merged in the United States, but do not have any business in the country.

Cryptocurrency operators, commonly referred to as Money Service Traders (MSBs), mostly have to effectively develop AML and CFT regulations as they are often set very high standards in the implementation of recommendations. FATF recommendation. In addition to FATF, businesses must also comply with regulations issued by the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

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However, the FATF report also criticized the US for regularly having a $3,000 level for unknown transactions – the standard is no more than $1,000 as recommended by the FATF.

For the National Revenue Service (IRS) and Financial Crimes Enforcement Network (FinCEN), FATF also conducted an examination of both organizations in the exchange between different cryptocurrencies, exchanges between individuals with others. And they criticize that the strategy has not been detailed. The US also does not verify high-risk service providers because they are protected by the MSB regime. The report also states:

“Therefore, the approach is not entirely clear whether they focus much on the risks or not? Especially of all CVC [convertible virtual currency] providers, only 30% have been tested since 2014.”

According to primexbt, the general conclusion is that it seems that the US regulator has failed to identify cryptocurrency service providers when making recommendations, but such issues can be considered minor issues. Enough for the US to deserve a score equivalent to a B in the FATF rating system.