The objective is to operate with transparency, although firms such as Chainalysis believe that this will affect users and services

The Financial Action Task Force (FATF), the international government organization dedicated to combating money laundering and financing of terrorism, gave its 37-member countries its recommendations to regulate cryptocurrency exchanges.

In a recent statement, providers of virtual assets, including exchange houses, are required to provide information about their clients to the institution where the funds are moved when making a withdrawal. That is a controversial request, since it is currently requested from different agents to safeguard the confidential information of their users.

This recommendation makes official the suggestion presented by the FATF in February. One of the requests is that countries must be sure that when they send money, companies must obtain and maintain accurate and required information from the originator (who sends) and the beneficiary (who receives).

In the case of exchanges, they must provide this information to the beneficiary institutions; if there is any. In addition, countries must ensure that beneficiary institutions obtain and maintain the information required (not necessarily accurate) from the originator and the required and accurate information from the beneficiary.

Essential Information

The new FATF guide suggests that in each transfer information about the name of the originator (issuing client), its account number, the number of the account used for the transaction process, as the wallet of virtual assets, must be collected.

In addition, institutions must have the geographic address of the originator, or the national identity number, and the customer identification number (not the transaction number).

In the case of beneficiary, they must give their name and account number where they usually make a transaction; for instance, the wallet of virtual assets.

Taking into account all the aforementioned, the objective would be to avoid the criminal and terrorist use of virtual assets. To make it real, the FATF announced that it will give 12 months of “grace” to comply with the guidelines.

This procedure consists of the so-called travel rule, this is, an old requirement of international banks to send money from a client. However, in the current world of cryptocurrencies this process would affect the privacy of its users and, perhaps, compliance with laws.

The FATF guide even says that nations must ensure that suppliers can mitigate the risks of transfers using mixers or other similar tools. Virtual asset providers must also be able to prohibit transactions with sanctioned people.

Some Days before the G20 Meeting

Chainalysis data firm believes that this rule will generate several services to close, instead of providing greater transparency. The FATF recommendations about anti-money laundering policies are not binding. The member countries adopt them by creating their own legislation. Even so, if they do not comply with the rules, they are blacklisted as dangerous countries for foreign investments.

This announcement was granted some days before the annual meeting of the Group of 20 (G20) to be held in Japan on June 28th and 29th. The G20 proposes to develop a harmonious international cryptocurrency regulation, as well as banks from different countries request a “homologous” regulation due to the launch of Libra, the cryptocurrency of Facebook that would compete with banking institutions.

The request for international regulation of operations with cryptoactives is gaining strength, whilst decisions are being made.

By María Rodríguez


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