Revised FATF Recommendations – Virtual assets and virtual asset service providers are subject to AML regulations

Paris, 19 October 2018 – Given the urgent need for an effective, risk-based response to AML risks associated with virtual asset financial activities, the Financial Action Task Force (FATF) revised its Recommendations on combating money laundering and the financing of terrorisms (AML/CFT). The FATF recognizes that virtual assets and related financial services have the potential to spur financial innovation and efficiency, nevertheless it stated that they also create new opportunities for criminals and terrorist to launder their proceeds or finance their illicit activities. Authors: Darko Stefanoski, Orkan Sahin, Elena Leoni

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Therefore the FATF laid out additional requirements and practical steps for jurisdictions worldwide to prevent the misuse of virtual assets.

New regulation on virtual assets in a nutshell 

  • The FATF Recommendations set out comprehensive requirements for combating money laundering and terrorist financing that apply to all forms of financial activity – including those that make use of virtual assets.
  • The FATF has adopted changes to the FATF Recommendations and Glossary that clarify how the Recommendations apply in case of financial activities involving virtual assets. These changes added to the Glossary new definitions of “virtual assets” and “virtual asset service providers” – such as exchanges, certain types of wallet providers, and providers of financial services for Initial Coin Offerings (ICOs).
  • These changes make clear that jurisdictions should ensure that virtual asset service providers are subject to anti money laundering and terrorist financing regulation, for example conducting customer due diligence including ongoing monitoring, record-keeping, and reporting of suspicious transactions. They should be licensed or registered and subject to monitoring to ensure compliance.
  • All jurisdictions should urgently the necessary actions, in particular they have to assess and understand the risks associated with virtual assets in their jurisdiction, apply risk-based AML/CFT regulations to virtual asset services providers and identify effective systems to conduct risk-based monitoring or supervision of virtual asset service providers.

FATF to issue its Crypto Guidelines by mid-2019

In light of the rapid development of the range of financial functions served by virtual assets, the FATF stated that it will – by June 2019 – issue additional instructions on the Standards and how they expect them to be enforced. 

As Switzerland is a FATF member, FINMA calls on all financial intermediaries to take the FATF information into account in their risk management strategies. It also requests recognized self-regulatory organizations to inform their members. 

What EY offers to support you in order to be AML compliant in Switzerland

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