US is still not compliant with crypto rules: FATF

on Apr 2, 2020
  • The global money-laundering watchdog recently stated that the US is still not fully compliant with its crypto.
  • The country is only Largely Compliant, but not Compliant, according to the FATF.
  • Several minor issues to resolve, such as keeping detailed records of transactions of $1,000 and larger.

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The Financial Action Task Force (FATF),  recently spoke about the US’ compliance with crypto recommendations. Unfortunately for the US, the money laundering watchdog believes that it has yet to become fully compliant.

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At this point, the FATF only detected ‘minor deficiencies,’ as it reported on Tuesday. However, it seems that this is still enough to be problematic.

What is stopping the US from being fully compliant?

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The report provided several examples of what America is still doing wrong. One example is that the money services businesses (MSBs) from the US only keep details for transactions of $3,000 and more. However, according to the rules, they would have to keep detailed records of transactions involving $1,000 and more.

The rules in question are FATF’s own recommendations, which is why the watchdog is rather strict about them.

“This higher threshold is not clearly supported by low ML/TF [money laundering/ terrorist financing] risks.”

Next, the FATF also noticed that the US does not identify ‘higher risk’ crypto service providers. The reason for this is that they are still only covered by a broad MSB regime. As a result, the country’s approach, as it is right now, is not ‘sufficiently risk-focused.’ Finally, the watchdog noted that only 30% of registered crypto providers went through inspection in the last six years.

The FATF then concluded that the US still remains Largely Compliant, but not Compliant with recommendation 15. There are four levels of compliance in total — non-compliant, partially compliant, largely compliant, and compliant.

What is Recommendation 15?

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The mentioned recommendation 15 is a set of rules that came into effect last year, in June. It provides guidelines for cryptocurrency businesses to prevent illegal activities. For now, it is mostly focused on terrorist financing, money laundering, and financing of proliferation.

It requires businesses dealing with cryptos to get and hold, ‘required and accurate originator information.’ It must also obtain and hold required beneficiary data on virtual asset transfers. All of this must be securely and immediately submitted to a financial institution or the beneficiary VASP. The data must also be available for inspection, should the appropriate authorities request it.

The compliance ratings for other countries were also published this Tuesday.