FATF to “Grey List” Countries Not Compliant with Crypto AML Rules

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  • The FATF is pushing for the “travel rule” to track all cryptocurrency transactions.
  • The grey list is a list of countries designated by the FATF as “Jurisdictions Under Increased Monitoring.”
  • There are currently 23 countries on the FATF grey list.

The Financial Action Task Force (FATF) may “grey list” nations that don’t follow its anti-money laundering (AML) regulations for cryptocurrencies.

The FATF is an international body that establishes policies to stop money laundering within the G7 and another 30 or so developed countries.

The regulation, formally known as FATF Recommendation #16, calls for virtual asset service providers (VASPs) to share information about the senders and recipients of cryptocurrency transactions exceeding a specific threshold. In particular, the rules say that VASPs must share information about who the sender and receiver are when a transaction is worth over $1,000.

The global financial watchdog is reportedly planning annual checks to ensure countries are enforcing AML and Counter-Terrorist Financing (CTF) rules on crypto providers, according to a report from Al Jazeera on November 7.

What is the Grey List, and what Countries are on it?

The grey list is a list of countries designated by the FATF as “Jurisdictions Under Increased Monitoring.” According to the FATF, nations on this list have committed to fixing strategic inadequacies within agreed-upon deadlines and consequently face enhanced scrutiny.

It is different from the FATF “blacklist,” which includes Iran and North Korea, and lists nations with “significant strategic deficiencies in relation to money laundering.” The grey list currently includes 23 nations, including Syria, South Sudan, Haiti, and Uganda.

The United Arab Emirates (UAE) and the Philippines, two countries that are known for their crypto activity, are on the grey list as well. But according to FATF, both nations have made a “high-level political commitment” to cooperate with the watchdog in an effort to enhance their AML and CFT policies. 

While failing to adhere to the crypto AML guidelines won’t automatically land a country on the FATF’s “grey list,” it might harm its overall rating. This may prompt some to slip into increased monitoring, according to an unnamed source quoted by Al Jazeera.

On the Flipside

  • The AML watchdog revealed in April 2022 that numerous countries, including those with virtual asset service providers (VASPs), are not in compliance with its CFT and AML rules.
  • Only 60 FATF-affiliated nations have begun virtual asset regulation and supervision. At the CTC meeting in New Delhi, FATF vice president Elisa de Anda Madrazo said the “rest of the world doesn’t have legislation” and more than 50% of countries “have not even started the process.”

Why You Should Care

Despite the fact that the FATF lacks enforcement authority and must rely on governments to put its recommendations into practice, non-compliant nations run the risk of suffering severe reputational harm. This might also obstruct investment flows and access to the global financial system.

Read more on crypto regulation:
EU Agrees to Regulate Cryptocurrency Transfers

Read more on global crypto regulation efforts:
Next US Congress to Legislate on Stablecoin Regulation

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

Author

Arnold is a crypto enthusiast who learned about Bitcoin in 2017. He is fascinated by the technology behind it and the potential it has to revolutionize the world economy. He is a prolific writer and enjoys sharing his knowledge with others. He is also a tech enthusiast and loves tinkering with gadgets and software.