FATF Report, Crypto and U.S. Regulations

Crypto regulations, more precisely the implementation of crypto regulations is a serious challenge due to numerous factors. Moreover, it is hard to find comprehensive information regarding this industry and what each country is doing to address issues connected with cryptocurrencies.

Several days ago, the Financial Action Task Force (FATF) released its report. As a reminder, the Financial Action Task Force is an independent inter-governmental body that develops policies against money laundering, etc.

The “3rd Enhanced Follow-up Report & Technical Compliance Re-rating” contains interesting details connected with crypto. It is worth mentioning that, FATF reevaluated the U.S. on its compliance with the global anti-money laundering (AML) and counter-terrorist financing (CTF) regulations.

According to this report, the U.S. is largely compliant with FATF regulations when it comes to cryptocurrencies and virtual assets. However, the U.S. still has a lot of work to do as there are issues as well.

In 2019, FATF amended its guidelines. It is interesting to have a look at how new guidelines changed the situation.

U.S. authorities and crypto industry

Hopefully, U.S. regulations are effective in covering different types of Virtual Asset Service Providers (VASP) includes various entities such as exchanges and custodians.

However, as state-above, there are some problems. For example, regulations do not explicitly deal with the specific case of VASP. Local regulations are not good enough to cope with cases when VASP is incorporated in the U.S. but has otherwise no business in the country.

In general, cryptocurrency operators fall under the category of Money Services Businesses(MSB). Thus, most MSBs are required to develop effective AML as well as CTF regulations.

Some businesses may also have to comply with regulations imposed by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

FATF identified several problems. For example, the U.S. maintains its $3,000 threshold for occasional unidentified transactions. Nevertheless, the threshold should no more than $1,000 according to FATF.