FATF issues anticipated guidance on virtual currencies


The FATF has updated its 2019 Guidance as part of its ongoing monitoring of the virtual assets and VASP sector. The refreshed guidance should help all participants in the crypto assets world understand their obligations when it comes to preventing financial crime.

The virtual asset sector is evolving quickly, so continued monitoring and engagement between the public and private sectors is necessary. In October, the FATF published its updated Guidance: 2019 Guidance for a Risk-Based Approach for Virtual Assets and Virtual Asset Service Providers (VASPs).

FATF rationale for the update

The FATF standards require countries to assess and mitigate their risks associated with virtual asset financial activities and providers, license or register providers, and subject them to supervision or monitoring by competent national authorities. VASPs are subject to the same relevant FATF measures that apply to financial institutions. This guidance will help countries and VASPs understand their anti-money laundering and counter-terrorist financing obligations, and effectively implement the FATF’s requirements as they apply to this sector. The guidance provides relevant examples and potential solutions to implementation obstacles, all of which is being heavily scrutinized by financial firms in the US that operate in the crypto space internationally, and are also aware that their home regulator (FinCEN) traditionally governs in line with FATF guidance, once published.

Practical note

The 2021 Guidance includes updates focusing on the following six key areas:

  1. Clarification of the definitions of virtual assets and VASPs
  2. Guidance on how the FATF Standards apply to stablecoins
  3. Additional guidance on the risks and the tools available to countries to address the money laundering and terrorist financing risks for peer-to-peer transactions
  4. Updated guidance on the licensing and registration of VASPs
  5. Additional guidance for the public and private sectors on the implementation of the “travel rule”
  6. Principles of information-sharing and co-operation amongst VASP Supervisors.

How Bovill can help

Our teams in the US, UK and Asia have a wide understanding of virtual asset businesses and are experts in regulatory compliance and financial crime. In particular we can help you with:

  • Review of 2021 Guidance for existing crypto businesses
  • Review of MSB/MTL licensing requirements for new businesses
  • Application support for MSB/MTL Licensing for new businesses.

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