FATF Unveils New AML Plans as Ransomware Attacks Decline

Global anti-money laundering watchdog, the Financial Action Task Force, has called for greater adoption of the Virtual Asset Service Provider Travel Rule to prevent illicit money flows using cryptocurrencies.

In its latest report, the FATF laid out a roadmap that calls for improved virtual asset regulation in FATF member-states and FSRBs that will allow them to apply the travel rule and other anti-money laundering recommendations to crypto.

FATF will help countries to implement travel rules

According to the report, delegates attending the recent FATF plenary in Paris, France, agreed on a plan to boost enforcement of standards on “transmission of originator and beneficiary information” in accordance with its revised travel rule. The FATF amended the travel rule in 2019 to compel virtual asset service providers to collect and share data about the source and destination of digital asset transfers in excess of $1,000.

The United States, which has a limit of $3,000, required minimal changes to accommodate the FATF’s 2019 travel rule amendments as most of the requirements were already codified in the country’s Bank Secrecy Act.

However, Sens. Elizabeth Warren and Roger Marshall recently drafted a bill to cast a wider net around the crypto industry. The proposed regulation suggests reclassifying some crypto firms as money service businesses. This designation would, among other things, bring them under the umbrella of the Bank Secrecy Act and subject them to greater record-keeping.

In plenary, the FATF suspended the membership of the Russian Federation as the country’s war against Ukraine entered its second year. The FATF said Russia’s actions threatened global financial stability and violated the spirit of cooperation among FATF members in eliminating illicit money flows.

The FATF has also placed Jordan on its so-called gray list for deficiencies in digital asset risk assessment, among other things.

As the world’s anti-money laundering authority, the FATF relies on autonomous, interdependent regional bodies (FSRBs) to turn recommendations into regulations. These bodies cover Asia-Pacific, the Caribbean, Eurasia, the Middle East, Latin America and Africa.

Number of ransomware is low but there is still work to be done

Last year, cryptocurrency-related ransomware schemes decreased from $765.6 million in 2021 to $456.8 million in 2022.

While the decline is promising, Chainalysis argues that these numbers may not necessarily reflect a reduction in incidents. It may still be crypto addresses that the analytics tool hasn’t flagged as suspicious, it notes.

In addition, the firm credits a decline in victims refusing to comply with attackers’ demands as cyber insurance companies tighten regulations. The Office of Foreign Assets Control also prohibits transactions with approved entities. Ransomware revenue mostly went to centralized exchanges in 2022, whose adoption of the FATF’s 2019 rules could further reduce illicit fund flows.

Crypto firms complying with the new FATF guidelines must develop secure methods of sharing counterparty information while ensuring confidentiality.

Last year, the US Treasury Department approved the Ethereum mixer Tornadocash after it was used to intercept the movement of $96 million from the Horizon Bridge attack.

be for[In]Crypto’s Latest Bitcoin (BTC) Analysis, Click Here.