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FATF published guidelines for crypto industry

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Global anti-money laundering (AML) agency the Financial Action Task Force (FATF) has published an updated version of the guidelines for crypto industry. The organization has set standards for decentralized finance (DeFi) and non-fungible token (NFT) sectors.

FATF introduced the first version of the manual in June 2019. Then Bitcoin exchanges and other Virtual Asset Service Providers (VASPs) were obliged to comply with the rules on combating money laundering and terrorist financing by analogy with traditional financial companies.

In June 2021, FATF noted that most jurisdictions have not yet implemented these requirements, and called on countries to speed up the process.

New version of the document

The organization gained experience with implementing standards in order to develop a new version of the document. And also considered the comments of industry participants.

In the updated guidance, FATF recommended that supervised countries show flexibility at the initial stage of implementing the requirements. The organization recognized that VASP and other market players are experiencing some difficulties with the integration of new systems necessary to ensure compliance.

“We recognize that creating tools to ensure compliance requires a lot of effort. And maybe VASP needs some time to invest in the technologies needed to meet the requirements;” FATF Policy Analyst Ken Menz told CoinDesk.

NFT and decentralization

The organization also noted that state regulators should broadly interpret the definitions used by companies and classify them based on the services offered.

According to FATF, a virtual asset (VA) is not just a digital representation of value. This entity must also include a tradable component that allows for the exchange of value. NFT organization does not belong to this asset class. However, if these tokens are used for payment or investment, they should be regulated according to FATF guidelines.

FATF stressed that jurisdictions will have to constantly evaluate new projects and the degree of involvement of management in them. The document says that many of them use the word “decentralized”. Despite the fact that there is a person or legal body brought to liability.

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