There may yet be some wriggle room for the crypto exchanges and other virtual asset service providers (VASPs) struggling to get their platforms ready for Travel Rule compliance – with the Financial Action Task Force (FATF) admitting that it may be prepared to budge on amending the guidance, which some claim is not fit for purpose.
Per a paper from the American Treasury Department, the FATF has “agreed to seek public consultation on amendments to its June 2019 guidance,” which includes the Travel Rule.
The rule is a series of anti-money laundering and terrorist funding compliance measures for VASPs that governments around the world are set to enshrine into national law – and will force VASPs to share data with government regulators and one another in an effort to flag and catch suspicious crypto transactions.
However, some crypto industry players claim that the Travel Rule is built on principles that apply to conventional finance, making them unworkable for the crypto industry.
At the V20, a (virtual) head-to-head meeting of regulators like the FATF and industry leaders late last year, the FATF did not indicate that it was prepared to provide any room for maneuver on the Travel Rule – and even hinted that it was prepared to expand its scope. The group also claimed that it was looking to target peer-to-peer (P2P) platforms, and appears to have come good with its promises on this front.
The Treasury document, along with an official FATF release on the activities of its Plenary Session confirmed that a new “public consultation draft” was coming in March, with FATF expected to “release the final updated guidance this summer,” in time for a self-imposed June deadline.
The new paper will address matters such as stablecoins and “how to address the risks of peer-to-peer transactions.”
The FATF added that it had launched a new 12-month review that it claimed “will look at the state of implementation globally of the FATF Standards on virtual assets, and identify any further challenges.”
Its first such review, the body claimed, uncovered the fact that, it said, “both the public and private sectors had made progress in implementing necessary measures.”
But, the FATF claimed, its review “also revealed a need for greater guidance to implement the revised requirements,” including for what it called “low-capacity countries.”
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