Under the present German government, a new President for the Country’s Financial Action Task Force on Money Laundering (FATF), Dr. Marcus Pleyer, has been appointed, presenting the group’s plan during the period from July 2020 to June 2021. Dr. Marcus Pleyer resumed office July 1, replacing the Chinese representative Xiangmin Liu.
Among the main areas to which special attention will be paid is the digital transformation of Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT). There is no exact information about the intentions of the FATF. However, the new rules will largely reflect the point of view previously presented by the organization concerning cryptocurrencies. In this regard, the crypto community expects the FATF to put forward regulatory standards on some issues.
Thus, the new leadership will continue the work of the former president in this direction.
As a result, the new policy is most likely to affect the crypto sphere and develop more stringent mechanisms to counter the legalization of criminal proceeds using cryptocurrency. This initiative will help law enforcement amid “growing risks.”
How Will New FATF Policy Affect Cryptocurrencies?
FATF decisions can still affect the cryptocurrency market, which is subject to strong volatility. Firstly, it can affect the general information background around the industry. Secondly, the recommendations of the Group can be used to develop official rules for combating money laundering, both in individual countries and at the interstate level.
Setting clear regulations for cryptocurrencies can open access for countries to the adoption of a new financial instrument. Currently, for various reasons, digital assets are far from legal in all jurisdictions of the country.
Given the active discussion on the KYC and AML policies, this scenario is valid. What position the FATF will adhere to and how the market will react, it will become clear at the next meeting of the organization, slated to develop proposals for the G20.
Last FATF Efforts and Cryptocurrency Behavior
The FATF published updated cryptocurrency regulatory standards in June 2019. One of the key changes in the document was the requirement for data exchange between participants in the cryptocurrency market. When processing transactions, operators must now exchange information about their customers.
As a response, several cryptocurrency firms have introduced a new standard for messaging between industry participants. The standard, dubbed IVMS101, defines what information virtual asset providers (VASPs) should transmit along with cryptocurrency transaction data. The new standard will help industry companies comply with FATF requirements.
An industry messaging standard will greatly simplify this requirement. If companies do not have a simple message formatting tool, they will have to constantly reconfigure the settings for receiving and sending information to avoid errors. This is an expensive procedure when it comes to handling large volumes of transactions.