FATF Labels US as ‘Largely Compliant,’ Points Out ‘Deficiencies’

The Financial Action Task Force (FATF) has labeled the United States’ steps against Money Laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Read this Term and terror financing with digital currencies as “largely compliant.”

In a report published on Tuesday, the intergovernmental evaluated the country’s measures for anti-money laundering (AML) and counter-terror financing (CTF) in areas across the digital financing ecosystems, including Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term.

“US authorities understand and are aware of the ML/TF risks emerging from virtual assets,” the paper stated. “Aside from various taskforce and working groups set up to consider the risks, their risk understanding is also reflected in their 2018 National Money Laundering Risk Assessment and National Terrorist Financing Risk Assessment, as well as the 2018 National Strategy for Combating Terrorist and Other Illicit Financing.”

The agency drafts its suggestions for new technologies under the “Recommendation 15” article.

"Minor deficiencies"

The FATF also pointed out that despite being largely compliant, the country still has “minor deficiencies.”

It also pointed out that under the money transmitting licensing requirements, the US-based firms only need to keep detailed records of transactions exceeding $3,000 - the amount is three times more than the FATF-recommended $1,000 cutoff for mandatory due diligence.

In addition, the agency also detailed that the US’ lack of “higher risk” virtual asset service provider identification also increases the risk of such transactions.

“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,” the agency detailed.

The FATF introduced “Recommendation 15” last June, providing guidelines for companies to prevent the misuse of the digital currencies.

Evaluating the combating measures of the regulatory agencies, the FATF rates each country in four labels - compliant, largely compliant, partially compliant, and non-compliant.

Other “largely compliant” jurisdictions include Hong Kong, which is still tightening its regulations for crypto companies.