The leader of the global anti-money laundering (AML) task force said he was “optimistic” that it is closer to establishing worldwide standards that apply to virtual currencies. “It is essential that we establish a global set of standards that are applied in a uniform manner,” said Marshall Billingslea, president of the Financial Action Task Force (FATF), according to Financial Times.
The task force has made significant progress on its work to create a “consensus across nations,” after the G20 requested it be treated as an urgent matter. Billingslea said he believes the FATF will be able to agree on the set of standards in October, when the group will meet to discuss which standards need to be updated to include virtual assets. Right now, he said, AML standards and rules relating to digital assets and virtual currencies are “very much a patchwork quilt or spotty process,” which are “creating significant vulnerabilities for both national and international financial systems.”
Once the task force agrees on the new regulations, it will revise the methodology, as well as figure out when it will take effect. While cryptocurrencies are not regulated by central banks, they are held digitally via electronic identities that will allow owners to remain anonymous. For this reason, they have been linked to payments for illegal products, such as guns and drugs, and are a target for hackers.
As a result, countries have taken matters into their own hands. Late last year, the U.K. gave the European Union (EU) expanded AML rules that would require traders to say who they are and report any activity that appears to be suspicious. The U.S. Treasury’s financial crimes unit is also picking up enforcement of cryptocurrency platforms that don’t have strong internal mechanisms in place to prevent money laundering. In addition, China and South Korea have gotten tougher on the sector, while countries like France, Switzerland, Malta and Gibraltar are creating their own ways of formally policing the space.
Despite the risks, Billingslea said digital assets also present “a great opportunity.” As far as regulation goes, “you can’t tilt too far in one direction or another” since blockchain “will continue to evolve.”