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Second 12-Month Review of the Revised FATF Standards on Virtual Assets and Virtual Asset Service Providers

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On July 5, 2021, the Financial Action Task Force (FATF) completed its second 12-month review of the implementation of its revised Standards on virtual assets and virtual asset service providers. This review looks at how jurisdictions and the private sector have implemented the revised Standards since the FATF’s first 12-month review.

The FATF’s first 12-month review report found that, overall, both the public and private sectors had made progress in implementing the revised FATF Standards, however, substantial work remained for the revised FATF Standards to be effectively implemented globally. As such, this second 12-month review focuses on the continued implementation of the FATF Standards.

While the second 12-month review reveals progress has been made in the implementation of the Revised FATF Standards, after two years many jurisdictions still do not have the basic regulatory framework for VASPs. The FATF covers more than 200 countries and jurisdictions, however, less than half (45%) of the 128 reporting jurisdictions reported that they have passed the necessary laws/regulations to permit or prohibit VASPs.

The number of jurisdictions whose AML/CFT regime for VASPs is actually operational is even lower. Most jurisdictions and most VASPs are not complying with the travel rule with only 10 jurisdictions reporting that they have implemented and are enforcing Travel Rule requirements for VASPs.

It is assumed that the majority of jurisdictions that did not provide a response to the FATF in this report have made even less progress in the implementation of the Revised FATF Standards.

FATF Travel Rule Takes Center Stage

The Travel Rule is the most focused on issue in terms of VASPs’ compliance with the revised FATF Standards. Yet only 10 jurisdictions reported that they are actively enforcing Travel Rule requirements for VASPs. An additional 14 jurisdictions reported that they have introduced Travel Rule regulations but were not yet enforced the requirements. No jurisdictions reported being aware of any VASP that fully complied with all elements of the Travel Rule.

There are various technologies and tools available that enable VASPs to comply with the Travel Rule, yet compliance with the Travel Rule continues to be reported as challenging due to “the lack of one unified technology to support it,” according to the FATF report.

Since FATF’s first 12-Month Review, there has been significant progress in Travel Rule technology development. Several standards and protocols—such as the Travel Rule Information Sharing Architecture (TRISA)—can now help enable interoperability between solutions and, when enhanced by blockchain analysis tools such as in CipherTrace Traveler, can also safely identify VASPs to exchange Travel Rule data.

The lack of Travel Rule implementation globally is a major obstacle to effective global AML/CFT mitigation and undermines the effectiveness and impact of the revised FATF Standards. For this, the FATF has indicated that one of its major next steps will be to accelerate the implementation of the Travel Rule globally.

How Jurisdictions Have Implemented the Revised FATF Standards

The report finds that many jurisdictions have continued to make progress in implementing the revised FATF Standards. Out of the 128 reporting jurisdictions that responded to the FATF’s questionnaire—triple the number that responded to the first 12-month review—52 jurisdictions claimed to now regulate VASPs, 6 jurisdictions prohibit the operation of VASPs, and the other 70 jurisdictions have not yet implemented the revised Standards in their national law. These gaps in implementation mean that there is not yet a global regime to prevent the misuse of virtual assets and VASPs for money laundering or terrorist financing.

For context, in the last 12-month review, 32 jurisdictions reported having existing regulations for Virtual Asset Service Providers, 13 jurisdictions reported having regulations in development, and 5 jurisdictions indicated the prohibition or potential near future prohibition of VASPs. The increase in jurisdictions that now regulate VASPs suggests that significant progress has been made, however global implementation still has very large gaps that need to be addressed.

Only 35 of the 58 jurisdictions that claimed to now regulate or prohibit VASPs reported that their regime was currently operational.

For jurisdictions that have yet to prohibit or regulate VASPs, 26 jurisdictions reported that they were in the process of passing the necessary legislation in order to regulate or prohibit VASPs;

12 jurisdictions reported that they had already decided which approach they intended to take on VASPs but had not yet commenced the necessary legislative/regulatory process; and 32 jurisdictions reported that they had not yet decided what approach to take for VASPs.

Of the 52 jurisdictions that reported that they have established regulatory regimes permitting VASPs, only 36 of these jurisdictions advised that they have commenced licensing and registering of VASPs. Only 32 reported jurisdictions have extended their regime to included VASPs incorporated overseas but which offer products/services to customers in their jurisdiction. In total, these jurisdictions have reported that they have so far licensed or registered 2,374 VASPs—more than double the reported number of registered/licensed VASPs recorded in the first 12-month review.

Non-Compliance with FATF Standards

The FATF calculates implementation of FATF Standards through a self-assessment by participating jurisdictions and is not an official assessment of the level of actual compliance with the FATF Standards. By assessing jurisdictions through the Mutual Evaluation and Follow-Up Report (MER/FUR) process, the FATF found that no jurisdictions with published reports have received a compliant (C) rating. Most jurisdictions have received a partially compliant (PC) rating or above. Two jurisdictions have been assessed as having a non-compliant (NC) rating.

According to the FATF, the main barrier to compliance appears to be a lack of action by jurisdictions. A third of jurisdictions with FURs/MERs assessing Recommendation 15 have taken no or minimal action to implement the requirements. The other two thirds of jurisdictions have taken action, but have not implemented the requirements fully—such as omitting Travel Rule regulations.

Suspicious Transaction Reporting (STR)/Suspicious Activity Reporting (SAR) and VASPs

In the FATF Report, 36 jurisdictions provided Suspicious Transaction Report (STR) data from VASPs. According to these 36 jurisdictions, VASPs had filed 146,704 STRs between 2019 and 2020. Some jurisdictions noted that they had noted an increasing number of STRs in 2020 as more VASPs entered the market, knowledge of AML/CFT grew in the sector, and VASPs developed their reporting systems. Of the 146,704 STRs reported, 55,118 were from 2019 and 91,586 were from 2020.

Market Metrics on Peer-to-Peer Transactions

Data collected by the FATF from several blockchain analysis companies, including CipherTrace, indicates the share of illicit transactions appears higher for peer-to-peer transactions than in transactions with VASPs. There were substantial differences in the data provided by the different blockchain analytic companies resulting in the FATF being unable to assess with certainty the size of the peer-to-peer sector and its associated ML/TF risk. The report therefore does not find clear evidence of a shift towards peer-to-peer transactions.

The inconsistency of results from blockchain analytics companies is indicative of inconsistent definitions, double counting and data quality issues.

FATF Next Steps for Crypto AML/CFT Compliance

All jurisdictions need to implement the revised FATF Standards, including Travel Rule requirements, as quickly as possible. The FATF will undertake the following actions focused on virtual assets and VASPs. According to the Second 12-Month Review, the FATF’s next steps will be to:

  • accelerate the implementation of the Travel Rule;
  • finalizing the revised FATF Guidance on virtual assets and VASPs by November 2021; and
  • monitor the virtual asset and VASP sector, but not further revise the FATF Standards at this point in time (except to make a technical amendment regarding proliferation financing).

FATF’s full report can be accessed here: http://www.fatf-gafi.org/publications/fatfrecommendations/documents/second-12-month-review-virtual-assets-vasps.html

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Source: https://ciphertrace.com/second-12-month-review-of-the-revised-fatf-standards-on-virtual-assets-and-virtual-asset-service-providers/

Blockchain

The GBA Annual Achievement Awards

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In April 2019, during the Guatemalan election, the people of Guatemala suspected that voting fraud had occurred. Since additional elections were scheduled for August 2019, citizens wanted assurance that there would be no fraud in the next election. That was the impetus for Fiscal Digital, a Guatemalan citizen volunteer organization, to utilize a public immutable blockchain for their elections. Against overwhelming opposition, the Organizer of Fiscal Digital, Carlos Toriello Herrerias, was successful in implementing a blockchain-based voting solution in Guatemala. Carlos was the winner of last year’s GBA Annual Achievement Award for Courage.

The Government Blockchain Association (GBA) is pleased to announce that the 2021 Annual Achievement Awards will be happening live in Washington DC, (9/30/2021) as part of Government Blockchain Week. Four awards will be presented in the areas of Leadership, Innovation, Social Impact and Courage. Nominations of individuals deploying exceptional blockchain use will come from around the globe. From securing land titling records, to self-sovereign medical records, to immutable and verifiable voting, blockchain is affecting every industry that transfers value. The winners of these awards are truly making a mark in history, and there is still time to nominate your colleague.

Winners will be awarded by MC Robert Levin of Emergingstar Capital, from a stage in Washington DC in front of a distinguished audience. Receiving a GBA Annual Achievement Award is a credential that can be listed on Linked In, resume’, and any other social media as a recognized global achievement. Do not miss this opportunity to promote the exceptional achievers in your circle. Nominate them for the GBA Annual Achievement Awards today.

Annual Achievement Awards nominations are open until August 15. Winners will be announced from stage in Washington DC on September 30th. All uses of blockchain technology are eligible.

Source: Palto

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Blockchain

Happy birthday Ethereum!

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Today marks the sixth birthday of the Ethereum network and Ether – the world’s second-largest digital asset.

Ethereum was created by the crypto innovator Vitalik Buterin when the project was officially proposed in a white paper in late 2013.

The following January, a 20-year-old Buterin, headed down to the annual North American Bitcoin conference in Miami, Florida, clutching that white paper.

It’s there he met his Ethereum co-founders – a group of Canadian crypto evangelists who immediately saw the huge potential of Buterin’s idea.

Crammed into a little beach house, they invited Buterin to stay and turn his vision into reality.

Within six months, Vitalik had dropped out of the computer science program at the University of Waterloo, and moved out to Zug, Switzerland (now known as crypto valley) along with the rest of the group-turned-team.

The founding members of the Ethereum network included Gavin Wood (Solidity smart contract language creator), Anthony di Lorio (DeCentral founder), Joseph Lubin (ConsenSys founder), and Charles Hoskinson (Cardano founder).

After the completion of an $18m funding round in 2014, development begun and Ethereum slowly materialised as a viable decentralised network.

However, tensions between members set in and the team begun to unravel.

Charles Hoskinson was the first to go, many others would follow.

Today, only Buterin still works on the project.

After a period of successful testing on July 30, 2015 – the first block of Ethereum was mined and the Ethereum mainnet was launched.

The network has rapidly grown to become one of the most prominent components of DeFi and the crypto industry at large. However, a victim of its own success, gas and transaction fees have begun to slow.

This is why Ethereum is now preparing for an imminent scalability update to Ethereum 2.0.

Watch this space.

More crypto news and information

If you want to find out more information about Bitcoin or cryptocurrencies in general, then use the search box at the top of this page. Here’s an article to get you started.

As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice

 

 

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Source: https://coinrivet.com/happy-birthday-ethereum/

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Binance to halt derivatives and futures trading in Europe

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Binance has officially halted futures and derivatives products offerings across the European region, commencing with Germany, Italy, and the Netherlands. 

The leading cryptocurrency exchange continues to limit products to users amid the ongoing challenges it faces from global regulators.

The move means users from these countries will not be able to open new futures or derivatives products accounts “with immediate effect”. 

Binance confirmed that if existing users have any open positions in these markets, they are advised to close them, noting that a further announcement would be made at a later date to confirm a 90-day period in which to close open positions.

Binance clarified the importance of European markets to their offerings and invited regulators to open a dialogue to discuss the requirements necessary at local levels. The discussion marks Binance’s continued efforts to collaborate with local and national regulators on the necessary requirements to operate in these areas.

“The European region is a very important market for Binance, and it is taking proactive steps towards harmonising crypto regulations, which is a positive sign for the industry,” wrote Binance in a tweet.

Binance also said it does “not actively market Futures and Derivatives Products locally” and that they plan to start “further scaling down” access to these products within Europe. 

The announcement follows Binance’s recent removal of high leverage trading products from its product offerings and a seemingly relentless wave of scrutiny and oversight from global regulators. 

Despite recent efforts to appease regulators by CEO Changpeng Zhao (CZ), Binance has been forced to delist certain margin trading pairs and cease trading and support for stock tokens like Tesla and Coinbase. Binance is also preparing to cut daily withdrawal limits from two Bitcoin (BTC) to 0.06 BTC in August.

Additionally, leading banking institutions and payment processors in the UK have started to limit transfers to and from Binance, citing “excessively high fraud rates” as a key reason for the decision. 

Binance has also been banned in Malaysia and given 14 days notice to shut down its operations. According to an announcement released today, the Securities Commission of Malaysia has issued public enforcement actions against Binance for “Illegally Operating in Malaysia.”

Binance has been given 14 business days from July 26 to comply. The order demands that Binance disables its website and mobile apps in Malaysia alongside ceasing “all media and marketing activities”.

The announcement also mandated Binance CEO Changpeng Zhao to ensure full compliance with the order. Malaysia’s securities regulator also urged citizens to desist from trading with crypto exchanges operating in the country illegally.

Binance-owned exchange WazirX is also being investigated by authorities in India to determine whether it was complicit in alleged money-laundering conducted by betting apps, which collected more than $134 million in the past 10 months. The Enforcement Directorate is investigating allegations that Chinese-operated betting apps laundered a portion of funds through WazirX.

CEO Changpeng Zhao remains optimistic about the future of Binance despite the recent regulatory issues faced by the exchange. He recently disclosed that Binance US, which operates separately from Binance, was looking to go public.

“Binance US is looking at the IPO route,” he said.

“Most regulators are familiar with a certain pattern or having headquarters, having corporate structure. But we are setting up those structures to make it easier for an IPO to happen.”

 

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Source: https://coinrivet.com/binance-to-halt-derivatives-and-futures-trading-in-europe/

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PayPal to launch crypto trading in UK

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PayPal has announced an extension of its cryptocurrency trading platform to UK customers.

This is a significant change of tune by the company, whose former CEO Bill Harris described Bitcoin in 2018 as “a useless payment system, and a ridiculous store of value”.

Now, however, the electronic payment service has slowly begun integrating cryptocurrencies on a large scale, with the moves described as part of an incremental new strategy by new CEO Dan Schulman as he revealed details in his recent Q2 reporting call.

“We continue to be really pleased with the momentum we’re seeing on crypto,” he said.

“We’re going to launch, hopefully, maybe even next month in the UK, open up trading there.”

Trading of crypto assets such as Bitcoin (BTC), Ethereum (ETH), and LiteCoin (LTC) is planned to arrive for UK users by the end of August. Currently, PayPal allows cryptocurrency transactions up to $100,000.

However, PayPal retains control of user’s cryptocurrency in a move reminiscent of traditional centralised financial practices, with no mechanism for transfers to private wallets.

This leads to the ‘not your keys, not your coins’ argument.

Jose Fernandez da Ponte, Vice-President for Blockchains, Crypto, and Digital Currencies suggested this will be a future feature incorporated into the Venmo platform.

Venmo – an easy payment app owned by PayPal – has become a primary facilitator of cryptocurrency trading for the company. The app is popular in the United States, but has made little impact on the British market.

Schulman indicated that Venmo is preferential as it can be used easily in day-to-day commerce, also noting the app’s rapid growth to 70 million users and revenues in excess of 180%.

“We’re also seeing strong adoption and trading of crypto on Venmo,” he added.

“In this quarter, we expanded the Venmo value proposition to allow merchants and consumers to pay for goods and services.”

Crypto in commerce seems to be the predominate focus of PayPal, although its ‘super app’ will operate a centralised trading exchange, this is a competitive space with the likes of DashDirect launching earlier this week.

Automated Clearing House (ACH) sits at the core of PayPal’s market-dominating strategy, allowing vendors and merchants to set-up direct debits to user’s crypto wallets.

“We’re working right now on transfers to third-party wallets, and we really want to make sure that we create a very seamless process for taxes and tax reporting,” Schulman explained.

“And so we’re really looking at how do we integrate that into both the trading and the buy with crypto on our platform.”

Implementation of DeFi products into PayPal’s ecosystem is fundamental to the firm’s potential success in integrating commerce with mass adoption, a fact that doesn’t escape their CEO.

“How can we use smart contracts more efficiently?” he asked in the Q2 call.

“How can we digitise assets and open those up to consumers that may not have had access to that before?”

“There are some interesting DeFi applications as well. And so we are working really hard.”

Needless to say, PayPal’s moves on cryptocurrency are of huge significance for crypto adoption – with the platform representing an easy and widespread point of entry for new crypto users.

More crypto news and information

If you want to find out more information about Bitcoin or cryptocurrencies in general, then use the search box at the top of this page. Here’s an article to get you started.

As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice

Disclaimer: We do not give advice on financial products.

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
Click here to access.

Source: https://coinrivet.com/paypal-to-launch-crypto-trading-in-uk/

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