Financial Crime

Issue 1167 / 7 July 2022

Financial Action Task Force

Virtual assets and virtual asset service providers - FATF publishes Report on implementation of Recommendations - 30 June 2022

The Financial Action Task Force (FATF) has published a targeted update on the implementation of its Recommendations on virtual assets (VAs) and virtual asset service providers (VASPs), with a focus on the FATF’s ‘Travel Rule’ (the Report). The Report looks at how jurisdictions and the private sector have implemented the Recommendations since the FATF’s second 12-month review in January 2021 and discusses relevant emerging risks and market developments, including on decentralised finance (DeFi), non-fungible tokens (NFTs) and unhosted wallets.

The Report cautions that countries need to strengthen their understanding of the money laundering and terrorist financing risks of the VA and VASP sector, and must rapidly implement the FATF’s Recommendation 15 and its Interpretative Note (R.15/INR.15) to mitigate these risks. Recommendation 15 requires countries to ensure that VASPs are regulated for anti-money laundering and countering the financing of terrorism (AML/CFT) purposes, licenced or registered, and subject to effective systems for monitoring and ensuring compliance with relevant measures under the Recommendations.

The Report also finds that jurisdictions have made only limited progress since July 2021 in implementing the FATF’s Travel Rule requirement, which is set out under Recommendation 16 and INR.15 and requires VASPs and other financial institutions to share relevant originator and beneficiary information in VA transactions. The FATF notes that only 29 jurisdictions have passed relevant Travel Rule laws since its March 2022 survey and only a small subset of these jurisdictions have started enforcement. The Report also notes that there are technological solutions to facilitate Travel Rule compliance in practice, but stresses that the private sector must increase interoperability between solutions and across jurisdictions to work towards full compliance.

The FATF calls on all jurisdictions to implement its standards on VAs and VASPs, including the FATF’s Travel Rule. To assist, it will:

  • promote the implementation of the FATF’s R.15/INR.15, including the Travel Rule, by facilitating discussions with member countries on common implementation issues and challenges, and by raising awareness through the G7, G20 and other high-level policy bodies;
  • monitor market trends for material changes or developments that necessitate further work, including how the standards apply to DeFi and NFTs, and engage with member countries and the private sector on country approaches; and
  • conduct a further review on progress and remaining challenges for implementation by June 2023.

FATF Report: Targeted update on the implementation of the FATF standards on virtual assets and virtual asset service providers


HM Treasury

AML/CFT - HM Treasury updates advisory notice on controls in high-risk third countries - 4 July 2022

HM Treasury has updated its advisory notice on anti-money laundering (AML) and countering the financing of terrorism (CFT) controls in high-risk third countries under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The updated advisory notice takes into account two statements published by the Financial Action Task Force (FATF) on 17 June 2022, identifying jurisdictions with strategic deficiencies in their AML and CFT regimes, as well as a separate FATF statement on Russia, also published on 17 June 2022.

HM Treasury Advisory Notice: Money Laundering and Terrorist Financing Controls in High-Risk Third Countries

Updated webpage