In response to the encryption standards established by the FATF (Anti-Money Laundering Financial Action Task Force), encryption regulations around the world are quietly changing.
Recently, according to the Nikkei News, a total of 15 countries are trying to cooperate to establish a new system designed by the FATF to enable countries to collect and share personal data on cryptocurrency transactions, implement anti-money laundering (AML) and counter-terrorism financing. (CFT) or combat other criminal activities.
The report pointed out that "the G7 countries, Australia and Singapore will develop new systems." Among them, the G7 members include France, Japan, Canada, Italy, Germany, the United Kingdom and the United States.
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The specific measures of the joint plan are expected to be completed in 2020 and will be managed by the private sector after the system is adopted.
It is understood that the FATF is an intergovernmental international organization established by seven western countries to study the dangers of money laundering, prevent money laundering and coordinate anti-money laundering international actions, and aims to formulate a policy to combat money laundering. It currently includes 37 member jurisdictions and two regional organizations.
In June of this year, the FATF released a final guide to the cryptographic assets and cryptographic service provider risk approach.
After the FATF issued its guidance, the organization said: “The FATF will monitor the implementation of new requirements by countries and service providers and conduct a 12-month review in June 2020.”
Although the FATF emphasizes that its “guidance is not binding and does not override the authority of national authorities”, in practice, countries that do not comply with the guidance may be blacklisted.
At the end of the June FATF plenary meeting, US Treasury Secretary Steven T. Mnuchin said that these recommendations include requirements for cryptographic service providers, and cryptographic service providers will need to “determine who they are sending money on, and who are these The recipient of the funds". They also need to “develop processes that require them to share this information with other virtual asset providers and law enforcement.” In addition, they need to “know the customer and conduct appropriate due diligence to ensure they are not engaged in illegal activities” and “develop Risk-based projects to explain the risks of their particular business type."
Steven T. Mnuchin further stated: "According to these new measures, virtual asset service providers will be required to implement the same "anti-money laundering" / CFT requirements as traditional financial institutions. "
Authorized service provider
In its guidance, the FATF stated that States are obliged to “assess and mitigate their risks associated with virtual asset activities and service providers”, including “authorizing or registering service providers and placing them under the supervision or monitoring of sovereign state authorities. under".
Currently, some countries have required cryptographic service providers to obtain permission from their financial institutions, such as Japan. Japanese cryptocurrency exchanges must be registered with financial services institutions. It is understood that there are currently 19 exchanges registered, and at least 110 other interested in registration.
In addition, some countries that do not have any encryption licensing system are considering implementing a cryptographic licensing system that complies with the FATF standard.
According to a report by the Korea Business Daily on August 7, the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) of South Korea disclosed a plan to directly regulate cryptocurrency exchanges and incorporate them into the regulatory system. ". “Currently, the FIU indirectly controls the cryptocurrency exchange through administrative guidance to the bank. ”
A FIU official said that the cryptocurrency exchange licensing system will be introduced as recommended by the FATF. Earlier, some media reported that the South Korean financial authorities plan to amend the Act on Specified Financial Transaction Information this year, "to strengthen the responsibility of the encrypted exchange to prevent money laundering."
A major difference in Korea's regulatory encryption assets compared to most other countries is the actual name system. In January last year, the South Korean authorities established a real-name system to reduce the anonymity risk of encrypted transactions, including money laundering. This means that any cryptocurrency exchange user who wants to withdraw or deposit in the won must open a real-name certification account at the bank that provides the service. However, banks currently only offer this service to the country's four largest cryptocurrency exchanges: Bithumb, Upbit, Coinone and Korbit.
According to the Korea Business Daily, there are nearly 200 password exchanges in South Korea, most of which do not use real-name systems.
If the amended bill is passed in plenary meeting, it will become the legal basis for the government to refuse to register a cryptocurrency exchange that does not use a real-name account.
According to the announcement, any exchange that does not use a real-name system "will be defined as an unregistered exchange, subject to imprisonment for up to five years and a fine of up to 50 million won (about $41,116)."
Amend the " anti-money laundering" law
Compared with Japan, South Korea and other countries choosing to establish new legal provisions, some countries have not introduced new laws, but have chosen an easier way to modify existing laws to combat money laundering activities involving encrypted assets.
In Thailand, for example, according to local media reports, the country recently disclosed a plan to amend its Anti-Money Laundering Law for this purpose. In May last year, China also began to regulate crypto assets, requiring cryptocurrency transactions to be approved by financial institutions.
Although Thailand is not a member of the Financial Action Task Force, Thailand is a member of the Asia-Pacific Anti-Money Laundering Group, which is known to ensure the adoption and implementation of certain FATF recommendations.
According to the "Bangkok Post" reported on August 5, the Thai Anti-Money Laundering Office (Amlo) said it would modify the "anti-money laundering" law to include cryptocurrency.
Amlo's acting secretary, Pol Maj Gen Preecha Charoensahayanon, plans to add a section to the country's anti-money laundering bill, requiring cryptocurrency exchanges to report activities to his office. He explained that this change is in line with the international standards that regulate these service providers. The Bangkok Post also stated that “Amlo officials currently do not accept complaints or deal with cases involving virtual currency directly (but) they need to be vigilant.”
In July of this year, the head of Amlo also revealed new reporting requirements for cryptocurrency exchanges. They will be required to report to the commercial bank a digital asset transaction worth more than 5 million baht (approximately $162,547), which will then be reported to Amlo.
Although many countries have not yet established a complete regulatory framework for encryption industry, most of them are only devoted to the cryptocurrency regulations, which makes it difficult to establish a global standard, but it is certain that the mutual guidance between countries makes the legislation clearer and faster. .
Compile: Sharing Finance Neo