FATF Asks Crypto Exchanges to Comply On Sharing Customer Information

To combat issues pertaining to cryptocurrency money laundering and terror financing, global regulatory agency Financial Action Task Force (FATF) is strengthening its control over cryptocurrency exchanges asking them to furnish important information and customer details.

Last Friday, June 21, FATF released a requirement wherein virtual asset service providers” (VASPs), which include crypto exchanges, to pass customer information while transferring funds between exchanges.

The FATF is seeking some crucial details like the sender’s name, wallet details, physical address, customer identification number, sender’s national identity, beneficiary name, beneficiary’s wallet details and so forth.

FATF has given a 12-month deadline for the implementation of these guidelines and stated that every country should ensure where their local crypto businesses send money and “… obtain and hold required and accurate originator [sender] information and required beneficiary [receipient] information and submit the information to beneficiary institutions … if any. Further, countries should ensure that beneficiary institutions … obtain and hold required (not necessarily accurate) originator information and required and accurate beneficiary information …”.

The guidelines also cover individuals who are using crypto wallets. FATF notes that such individuals will be treated as VASPs and thus subjected to licensing requirements.

The guidelines state: Competent authorities should take the necessary legal or regulatory measures to prevent criminals or their associates from holding, or being the beneficial owner of, a significant or controlling interest, or holding a management function in, a VASP. Such measures should include requiring VASPs to seek authorities’ prior approval for substantive changes in shareholders, business operations, and structures”.

Steven Mnuchin, the U.S. Secretary of the Treasury stated that crypto exchanges have to abide by all the FATF rules just like the traditional stock exchanges. Mnuchin said:

By adopting the standards and guidelines agreed to this week, the FATF will make sure that virtual asset service providers do not operate in the dark shadows. This will enable the emerging FinTech sector to stay one-step ahead of rogue regimes and sympathizers of illicit causes searching for avenues to raise and transfer funds without detection.”

He further added: We will not allow cryptocurrency to become the equivalent of secret numbered accounts [and] we will allow for proper use, but we will not tolerate the continued use for illicit activities.”

Well, the guidelines come just a week ahead of the upcoming G20 summit in Osaka, Japan scheduled on June 28-29.

It is clear that as more awareness for cryptocurrencies emerge, and big giant like Facebook, JP Morgan, Fidelity, ICE, etc. step into the game, regulatory agencies are likely to enhance their scrutiny on the market.