FOR IMMEDIATE RELEASE
[PARIS, 20 November 2020] The V20 Summit, held virtually 16 - 18 November, has concluded with a call for more frequent and proactive dialogue between the Financial Action Task Force (FATF), the virtual asset industry and its regulators, in the fight against money laundering and terrorist financing (ML/TF).
While FATF and regulators applauded industry achievements in response to the FATF Recommendations, such as the creation of IVMS 101, ongoing challenges with implementation of the Travel Rule were also highlighted, such as gaps in the global response and a lack of experience in dealing with regulatory issues. In addition, it was recognised that future discussions with FATF about the ML/TF risks of peer-to-peer (P2P) transactions, unhosted wallets, stablecoins and decentralised finance (DeFi) should include a broader representation of the virtual asset community than has previously been engaged.
“I certainly see and understand the great support for IVMS 101,” said Takahide Habuchi, Assistant Commissioner, International Affairs Office, Japanese Financial Services Agency, and Co-Chair of the FATF Virtual Asset Contact Group, in delivering his concluding remarks to the V20 Summit on behalf of the FATF. “We expect more progress and more proposals from the private sector going forward,” he said, emphasising that “continued dialogue and cooperation is very important” and FATF intended to engage with a broader set of industry stakeholders going forward.
“We welcome responsible innovation and we believe in the mission of FATF to prevent money laundering and proliferation financing,” said Habuchi, confirming that FATF would prepare a second 12-Month Review and updated guidance for the virtual asset sector by mid 2021. “We look forward to continuing to work with you to address both objectives,” he said.
Feeding back to FATF and regulators on key takeaways from an industry-only roundtable on Day Two of the V20, Siân Jones, Senior Partner of XReg Consulting, said FATF must consider developing entirely new approaches to manage money laundering and terrorist financing risks in crypto. She opined that the purpose of blockchain technology, in eliminating middle men and establishing trustless systems in order to disintermediate traditional finance, was fundamentally at odds with the FATF.
“The tried and tested methods work, after a fashion, in the traditional world of money,” said Jones. “Arguably, they can be made to sort of fit the intermediated crypto world. They do not necessarily fit the DeFi world and they’re not necessarily fit for purpose in that world,” she said.
Jones recalled her original speech at the inaugural V20 Summit of 2019, where she congratulated VASPs on being included in the global financial system and warned them to “wake up and smell the coffee.”
“If you believe, as some said yesterday, that the FATF standards as applied to you are not proportionate to the money laundering and terrorist financing risks in your sector, then you need to make the case, and you need to offer solutions to those risks,” said Jones, urging proactive engagement between industry and authorities. “The FATF, VASPs and those working in DeFi. We all need to step up our game if we want crypto to be successful and to manage the money laundering and proliferation financing risks,” she said.
“I think five years from now, we’re going to be facing a whole other set of issues around private wallets and non-custodial wallets,” said Dave Jevans, Chief Executive Officer of Ciphertrace and chair of TRISA. “It will make the work of the last 24 months look like child’s play,” he said.
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