Latest news with #FATF
Crypto Insight
17 hours ago
- Business
- Crypto Insight
FATF's crypto checklist hints at the next regulatory crackdown
Cryptocurrency regulations are increasingly aligning with global standards; 73% of eligible jurisdictions have now passed laws to implement the Financial Action Task Force's (FATF) Travel Rule. The Travel Rule mandates crypto service providers to collect and share users' transaction data, similar to traditional finance requirements. On June 26, the FATF released its annual report that outlines how recent regulatory moves by jurisdictions are converging with its global Anti-Money Laundering (AML) framework. This is a direct result of a years-long campaign by the FATF to bring cryptocurrencies in line with traditional AML and Counter-Terrorist Financing (CFT) standards. The FATF spotlighted stablecoins and decentralized finance (DeFi) for the second consecutive year, highlighting their rising use in illicit finance, including by North Korean actors. The organization said it plans to release targeted papers on stablecoins, offshore crypto platforms and DeFi by next summer, hinting at where global crypto regulation may head next. How the FATF became the backbone of crypto regulation The FATF's Travel Rule was extended to cover cryptocurrencies and exchanges in 2019 as part of the organization's standards on AML/CFT. It was added to Recommendation 15 (R.15) — one of FATF's 40 recommendations — as an interpretive note. Out of 138 jurisdictions, only one has achieved full compliance with R.15 in 2025. Meanwhile, 40 jurisdictions were assessed as 'largely compliant,' up from 32 in 2024. Three jurisdictions were removed from the noncompliance category. Compliance means a jurisdiction has enacted laws requiring the licensing or registration of virtual asset service providers (VASPs) — such as cryptocurrency exchanges and trading platforms — or has identified the legal persons conducting VASP-related activities. The licensing requirements across jurisdictions are 'very similar,' including in regions vying to be labeled as 'crypto hubs,' such as Singapore, Dubai and Hong Kong, Joshua Chu, co-chair of the Hong Kong Web3 Association, told Cointelegraph. The Monetary Authority of Singapore, the city-state's central bank, recently issued a warning to crypto exchanges engaging in regulatory arbitrage by avoiding a local license and relying solely on overseas customers. The exchanges were advised to either get licensed or exit by the end of June. The move sparked debate over whether Singapore truly aims to become a powerhouse for digital assets. Some in the industry speculate that Hong Kong could benefit most from its regional rival's crackdown on unlicensed exchanges. Chu warned that those looking for greener pastures in competing crypto hubs may end up disappointed, as all are adhering to the same FATF requirements. In fact, Singapore has issued more crypto licenses than Hong Kong. 'Regulators are also deadline fighters. So, they will make last-minute announcements (probably knowing the [FATF] draft of the report by that point) to see how they can improve their position before the formal report comes out,' Chu said. 'As a result, many jurisdictions have accelerated efforts to tighten controls, improve risk assessments and enforce the FATF Travel Rule. The FATF's June 2025 report reflects this urgency, showing that while progress has been made, significant gaps remain in risk assessment, licensing and enforcement.' Hong Kong has also been sprinting to roll out additional crypto rules. In May, its upcoming Stablecoin Ordinance passed the Legislative Council. The city then released an updated policy statement in tandem with FATF's report. The FATF said an increasing number of jurisdictions have now decided how they want to regulate their respective crypto sectors, with 82% of 163 respondents stating they've identified their preferred regulatory approach. There are two main directions jurisdictions can take: to permit or to prohibit, with prohibitions ranging from partial to blanket bans. Prohibition is becoming more common among Middle East and North Africa Financial Action Task Force and Eastern and Southern Africa Anti-Money Laundering Group members. However, the FATF warns that jurisdictions should consider this approach carefully, as full prohibition can be resource-intensive and difficult to enforce. 'When jurisdictions choose to prohibit rather than regulate, they do not eliminate the presence of crypto within their borders. Instead, they relinquish oversight, enforcement leverage and visibility into illicit flows,' Hedi Navazan, chief compliance officer of 1inch Labs and vice chair of the Digital Asset Task Force of the Global Coalition to Fight Financial Crime, told Cointelegraph. 'Let's be real, crypto is borderless,' she added. China, an FATF member, has partially prohibited cryptocurrency-related activities, such as transactions and mining. But the decentralized nature of blockchain technology still makes cryptocurrencies largely accessible to the public. Although Beijing has banned Bitcoin mining, Chinese mining pools continue to control the majority of the network's hashrate. Stablecoins and DeFi under the FATF spotlight Stablecoins and DeFi got their own sections in FATF's report for the second consecutive year in the latest update. Stablecoins, in particular, have been among the biggest stories in crypto in 2025 so far, with major jurisdictions advancing legislative proposals for stablecoin licensing, including the GENIUS Act in the US, which opens doors for tech firms to launch private stablecoins. The European Union has pushed further with Markets in Crypto-Assets (MiCA) Regulation, which sets rules for stablecoin issuers. But stablecoins have also been increasingly tied to illicit activities, including reliance by North Korean actors suspected of financing the state's weapons program, with industry estimates suggesting 63% of illicit transaction volumes were denominated in stablecoins. 'Stablecoins, especially USDT on the Tron network, have basically become the go-to tool for illicit actors. From North Korean hackers to scam networks… this isn't just a niche problem anymore,' said Navazan. Despite growing regulatory attention, most jurisdictions are still struggling to apply FATF standards to DeFi. According to the FATF's 2025 report, nearly half of the jurisdictions that have implemented or are working on the Travel Rule say that some DeFi platforms should be licensed as VASPs, but most haven't identified any such entities in practice. Out of 47 jurisdictions that claim DeFi can fall under VASP regulation, 75% have yet to find or license a single DeFi platform. Ignoring FATF standards can isolate an economy The FATF's influence is embedded within the United Nations framework, with multiple UN Security Council resolutions urging member states to implement FATF standards. 'This means jurisdictions face strong, concrete incentives to align their laws with FATF's evolving standards, not merely out of goodwill but to avoid severe consequences,' Chu said. Gray listing serves as a powerful enforcement tool for FATF, as it places a jurisdiction under increased monitoring, resulting in economic and reputational consequences. Budding crypto hub Dubai was formerly on the gray list before the United Arab Emirates was removed in 2024. 'While FATF does not make the law, you would be foolish to ignore it. When FATF speaks, regulators around the world listen. That's how it's always worked,' said Navazan. 'If your country doesn't align with those standards, it doesn't just risk a poor rating — it risks becoming isolated.' The FATF's statements, including its annual updates on crypto, offer a preview of where global regulations are headed. With stablecoins and DeFi emerging as key areas of concern in 2025, the FATF's planned research into these sectors is expected to shape the next wave of compliance measures. Source:
Yahoo
2 days ago
- Business
- Yahoo
The $51 Billion Crypto Secret: Why Stablecoins Are Now the #1 Tool for Criminals
In a newly released report, the Financial Action Task Force (FATF) says stablecoinsthose dollar-pegged crypto tokens everyone's trying to mainstreamare now the most commonly used tools for illegal activity on the blockchain. From fraud rings to North Korean hackers, illicit actors are increasingly moving money through stablecoins, especially Tether on the Tron network. The FATF highlights how stablecoins' key strengthslow cost, high speed, and price stabilityare also exactly what criminals want. And while global oversight is improving, the task force says major blind spots remainespecially around unhosted wallets that operate outside traditional financial systems. Warning! GuruFocus has detected 6 Warning Sign with META. Meanwhile, Washington is moving in the opposite direction. The U.S. Senate just passed the Genius Act, aimed at pulling stablecoins into the regulatory fold and making them more accessible to the public. That's triggered a wave of activity. Circle (NYSE:CRCL), the issuer of USDC, went public earlier this month, and its stock has already jumped more than 6x. A company linked to Donald Trump's familyWorld Liberty Financial now pushing its own stablecoin initiative. On the surface, it looks like the U.S. is all-in. But the FATF warns that as these tokens become more embedded in daily finance, their misuse could scale just as fast. The bigger picture? Roughly $51 billion in fraud- and scam-related on-chain transactions took place in 2024 alone, according to the report. And while stablecoins could one day sit quietly in the background of the financial system, like the Bank for International Settlements recently noted, that's far from guaranteed. Especially not with decentralized apps muddying the waters, and enforcement lagging behind innovation. FATF says it's drafting new rules for stablecoins due next year. Until then, investors eyeing the spaceespecially names like Circlemight be riding a powerful growth story... with regulators closing in fast. This article first appeared on GuruFocus.
Reuters
2 days ago
- Business
- Reuters
Kuwait strengthens anti-money laundering legislation
KUWAIT, July 1 (Reuters) - Kuwait has strengthened its anti-money laundering and counter-terrorism financing law, which will impose tougher penalties for violators, as it seeks to avoid falling foul of a global financial crime watchdog. The Paris-based Financial Action Task Force (FATF), a global money laundering watchdog, said in October that Kuwait's legal and supervisory framework had "serious shortcomings delivering effective outcomes", citing failures in addressing terrorist financing. The FATF requested the establishment of a domestic process tasked with freezing terrorist assets and publishing a full list of individuals under targeted financial sanctions (TFS). Under a decree issued on Monday, a government committee can now be delegated powers to implement resolutions aimed at combating terrorism, its financing and the spread of weapons of mass destruction, with immediate effect. These were previously reserved for the cabinet. It also set fines of up to 500,000 Kuwaiti dinars ($1.64 million) for violations. Finance Minister Nora Al-Fassam said in a statement that the amendments would help Kuwait improve transparency and meet international standards. The government has also introduced the requirement for companies to identify the "beneficial owner", who exercises ultimate control over the firm, and transferred supervision of exchange houses activities from the commerce ministry to the central bank. Kuwait's new law grants the government direct authority to freeze funds and assets suspected of links to money laundering or terrorism financing without a court order, lawyer Fawaz Al-Khatib told Reuters, adding the amendment "brings Kuwait closer to FATF international standards." In the Gulf, the United Arab Emirates, home to financial centres such as Dubai and Abu Dhabi, was dropped, opens new tab from the FATF's so-called "grey list" of countries at risk of illicit money flows in February 2024 after a little less than two years.
Zawya
2 days ago
- Business
- Zawya
Kuwait strengthens anti-money laundering legislation
Kuwait has strengthened its anti-money laundering and counter-terrorism financing law, which will impose tougher penalties for violators, as it seeks to avoid falling foul of a global financial crime watchdog. The Paris-based Financial Action Task Force (FATF), a global money laundering watchdog, said in October that Kuwait's legal and supervisory framework had "serious shortcomings delivering effective outcomes", citing failures in addressing terrorist financing. The FATF requested the establishment of a domestic process tasked with freezing terrorist assets and publishing a full list of individuals under targeted financial sanctions (TFS). Under a decree issued on Monday, a government committee can now be delegated powers to implement resolutions aimed at combating terrorism, its financing and the spread of weapons of mass destruction, with immediate effect. These were previously reserved for the cabinet. It also set fines of up to 500,000 Kuwaiti dinars ($1.64 million) for violations. Finance Minister Nora Al-Fassam said in a statement that the amendments would help Kuwait improve transparency and meet international standards. The government has also introduced the requirement for companies to identify the "beneficial owner", who exercises ultimate control over the firm, and transferred supervision of exchange houses activities from the commerce ministry to the central bank. Kuwait's new law grants the government direct authority to freeze funds and assets suspected of links to money laundering or terrorism financing without a court order, lawyer Fawaz Al-Khatib told Reuters, adding the amendment "brings Kuwait closer to FATF international standards." In the Gulf, the United Arab Emirates, home to financial centres such as Dubai and Abu Dhabi, was dropped from the FATF's so-called "grey list" of countries at risk of illicit money flows in February 2024 after a little less than two years. (Reporting by Ahmed Hagagy, editing by Federico Maccioni and Rachna Uppal)
Hindustan Times
2 days ago
- Business
- Hindustan Times
FATF norms endorse India's institutional mechanisms like JAM
The Financial Action Task Force's (FATF) new guidelines on financial inclusion have extensively endorsed India's institutional mechanisms such as Jan-Dhan, Aadhaar and Mobile (JAM) Trinity, as well as digital stacks, customers due diligence, and Financial Stability and Development Council (FSDC), emphasising that financial inclusion and the fight against financial crime are mutually supportive. India's electronic know-your-customer (KYC) support via Aadhaar is a 'good' example, FATF said. (HT Archive) The new guidelines cited India's financial inclusion efforts through digital identification and biometric data registries. 'In India, a multi-pronged approach to promote financial inclusion and promote transactions through financial channels, called JAM Trinity, was developed based on three pillars: (1) access to financial services to the unbanked population, (2) biometric based identification for every citizen, and (3) the development of a digital payment ecosystem. As per the Global Findex, access to financial services increased from 35% of total population in 2011 to 53% in 2014 and to 80% in 2017,' the guidelines said. India's electronic know-your-customer (KYC) support via Aadhaar is a 'good' example of collaborative measures that lower compliance costs for regulated entities while improving the outcomes, the global body added. The FATF updated its 'Guidance on Financial Inclusion and Anti-Money Laundering and Terrorist Financing Measures' after an extensive consultation with both the public and the private sectors. The guideline document was adopted by the global financial crimes watchdog at its June 2025 plenary. Emphasising its risk-based approach as a facilitator of financial inclusion, FATF said that a country's anti-money laundering and countering the financing of terrorism (AML/CFT) legal framework should expressly allow for regulated entities to implement simplified measures where lower risks are identified, and should avoid making the framework overly prescriptive or stringent. Highlighting India's frameworks, FATF said, the country created a solid institutional framework to coordinate and support its financial inclusion strategy. 'The National Strategy for Financial Inclusion for India 2019-2024 provides (1) an analysis of the status and constraints in financial inclusion in India, (2) specific financial inclusion goals, (3) a strategy to reach the goals, and (4) mechanisms to measure progress,' it added. The strategy, prepared by the Reserve Bank of India (RBI), reflects wide-ranging consultations with relevant stakeholders, it added. Citing an example of India's 'solid institutional framework' to coordinate and support its financial inclusion strategy, FATF lauded the creation of FSDC — an apex body for inter-regulatory coordination of the financial sector, chaired by the Union finance minister. Its members include top bureaucrats and heads of financial sector regulators such as RBI and Securities and Exchange Board of India (Sebi), among others. The FATF document also highlighted ease of compliance for customers in the Indian system. '…the country's CDD regime was flexible enough to accommodate financial inclusion and that the developments in e-KYC further reduced the need for relying on SDD [Simplified customer due diligence] practices,' it added.
