FATF Rates The U.S. As Largely Compliant Digital Assets Recommendations

As per its revised formula and criteria, the Financial Action Task Force (FATF) has recently rated the United States as ‘largely compliant’ for preventing any sort of illicit activities like terror financing and money laundering through digital assets.

FATF is an intergovernmental organization founded in 1989 through the combined initiative of the G7 economies for developing policies to combat money laundering.

Earlier this week on Tuesday, the intergovernmental standards group published its assessment stating that U.S’s compliance is fine with its banking rules, regulatory laws, and other evaluations around digital assets.

The U.S. is the most powerful member of the FATF’s global financial crimes network, however, it retains some sort of “minor deficiencies”. Despite the U.S. complying with many regulatory rules, it is not completely in line with the “New Technology” standards set by the FATF as part of its “Recommendation 15”.

For e.g. all the money services businesses registered in the U.S. only keep detailed records of transactions worth $3000 and more. However, this is three times the FATF’s basic due diligence trigger. Thus, there’s some possibility that the bad actors can slip out of FATF’s notice.

The FATF wrote: “This higher threshold is not clearly supported by low ML/TF risks”. Besides, the FATF has also noted that the U.S. regulators lag in their investigation of convertible virtual currency (CVC) businesses.

“Therefore, it is not entirely clear whether the current approach is sufficiently risk focused, especially since only 30% of all registered CVC providers have been inspected since 2014,” FATF wrote.

The FATF has said that such legislative gaps can also put some scope for niche VASP activities to evade any type of detection and further enforcement.

However, the FATF has praised the U.S. regulators in its recent efforts of dealing with virtual assets. With governments all across the globe working on their native digital currencies, the U.S. government and the Federal Reserve must be thinking on similar lines as well.

A few months, Fed chairman Jerome Powell said that they are considering the possibility of having a digital currency in the country’s financial ecosystem. However, before moving ahead with this project they will be considering all the pros and cons.

Moreover, a week back, the U.S. Congress announced $2 trillion fiscal-stimulus package to help its people combat the current economic situation caused due to the Coronavirus pandemic. One of the Congressmen suggested that the use of the Digital Dollar can help to provide aid to the poorest-of-the-poor and the unbanked.