FATF tells countries to quickly implement its Travel Rule to detect suspicious crypto activity 

The Financial Action Task Force told countries to speed up with implementing its Travel Rule for crypto, a key requirement to comply with sanctions obligations and to detect suspicious transactions. 

The global watchdog found that most jurisdictions have not applied its anti-money laundering and counter-terrorist financing standards to virtual assets and virtual asset service providers. 

It said that jurisdictions have made limited progress in introducing its Travel Rule, which requires virtual asset service providers to share users’ identities for transactions. 

“Countries that have not introduced Travel Rule legislation should do so as soon as possible, and FATF jurisdictions should lead by example,” the FATF said in a report yesterday.

“As of March 2022, while 29 out of 98 responding jurisdictions reported having passed Travel Rule legislation, only 11 jurisdictions have started enforcement and supervisory measures.”

David Carlisle, VP of Policy and Regulatory Affairs at blockchain analytics company, said, “The FATF’s report sends a clear message: countries and the crypto industry must do more to ensure compliance and address emerging risks in the space.”

“The report makes clear that the FATF is concerned that the growing ability of criminals to access DeFi platforms that currently operate largely outside of regulation presents a major risk.”

The report said that while about a quarter of responding jurisdictions are in the process of passing the relevant legislation, around one-third) have not yet started introducing it.

FATF said cross-jurisdiction should be promoted and market trends should be monitored.

“As jurisdictions and the private sector have implemented the Travel Rule, they have found challenges to implementation, especially between jurisdictions that regulate virtual assets and virtual asset service providers, and those that that do not (the ‘sunrise issue’),” the report said. 

The watchdog said there was a “significant threat” of ransomware actors misusing virtual asset service providers for payments.