Financial Action Task Force to Issue Anti-Money Laundering Guidelines on Virtual (Crypto) Assets

On the chance you missed it …

FATF is expected to issue recommendations regarding Anti-Money Laundering procedures that should be applied to virtual assets, e.g., Bitcoin et al. If these reports are true and FATF adopts its typical formula for standards, this which will fundamentally change these assets.

The FATF is an iinter-governmental international organization that issues standards for combatting money laundering and terrorism finance.

It does not have the power to issue laws which bind individual countries. But its standards are generally but not always adopted by countries into their national laws.

Why?

Countries that don't adopt or sufficiently implement FATF standards on AML and countering terrorism finance are identified by FATF as "high risk and other monitored jurisdictions".  The financial community then imposes special measures when dealing with these countries or more simply "black-lists" them.  Typically countries fall in line, though there are some exceptions, e.g., DPRK.

FATF's recommendations tend to focus on two areas:

1. CDD or KYC - That is, knowing the identity of the customer through obtaining various information evidenced by documents (e.g., for an individual a copy of a passport or national ID card, proof of address) and as well the customer's financial status and any special status, e.g., politically exposed person.  This information is generally to be periodically reviewed and updated as necessary
2. Transaction Monitoring - Scrutinizing of transactions to identify any that are suspicious with subsequent further review/investigation of the transaction.  If after the investigation, it appears that the transaction is suspicious, a report must be filed with the designated national authority.

These measures go to the heart of one of the two touted features of crypto-assets; anonymity.   

The other major feature that the crypto-assets are backed by air remains intact.