Poor Crypto Travel Rule Compliance Identified by FATF

FATF Urges Countries to Implement “Travel Rule” to Prevent Money Laundering

The Financial Action Task Force (FATF) has once again urged countries to put into effect the “travel rule” as a means of preventing money laundering and terrorism financing activities that can be facilitated through cryptocurrencies.

The United Nations, tasked with promoting strategies to combat money laundering and terrorist financing, revealed on June 23 that “many” of its member states had not implemented the rule.

Following a series of FATF gatherings at its base in Paris, the call was made.

The FATF reported that “more than half” of those surveyed indicated they had not taken any steps to implement the rule.

The FATF has called on countries to swiftly put into place anti-money laundering (AML) and counter-terrorism financing (CTF) measures for activities related to cryptocurrencies, in order to stop criminals from taking advantage of the considerable gaps in regulation.

In a survey conducted by FAFT in March 2022, it was found that only 29 out of 98 jurisdictions had met the requirements for travel rules, and a few of these jurisdictions had begun to enforce them.

The FAFT travel rule was established to combat the anonymity of illicit crypto transactions. It was brought into effect in June 2019 and revised in June 2022. At the meetings, FATF members agreed to an additional amendment to the regulations.

FATF to Release Report Urging Member Countries to Plug Gaps in Crypto Regulations

The Financial Action Task Force declared that it would be releasing a report on June 27, which will urge the member countries to take the necessary steps to plug the gaps that criminals take advantage of.

Former NFL team owner Reggie Fowler has been sentenced to six years in prison for his involvement in crypto “shadow banking.”

The report will refer to North Korea’s illicit virtual asset activities, which FAFT said are believed to be channeled into its Weapons of Mass Destruction program.

The report will also address illicit activities stemming from other “emerging risks,” such as stablecoins, decentralized finance, nonfungible tokens (NFTs) and peer-to-peer transactions, it added.

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