The new FATF Guidance incorporates and supersedes the 2019 guidance while it outlines the need for countries and VASPs, and other entities involved in VA activities, to understand the money laundering and terrorist financing (ML/TF) risks associated with VA activities and to take appropriate mitigating measures to address those risks.
In general, the new guidance:
- Indicates that VASPs have the same full set of obligations as financial institutions and designated non-financial businesses and professions.
- Details the full range of obligations applicable to VASPs as well as to VAs under the FATF Recommendations
- explains the VASP registration or licensing requirements:
- VASPs should be registered or licensed – at a minimum where they were created
- jurisdictions can choose to require VASPs to be licensed or registered before conducting business in their jurisdiction or from their jurisdiction
- national authorities are required to take action to identify natural or legal persons that carry out VA activities without the requisite license or registration- even though there is a prohibition of VAs and VA activities at the national level
- Indicates that only competent authorities, and not self-regulatory bodies, can act as VASP supervisory or monitoring bodies
- Indicates that VASPs, and other entities involved in VA activities, need to apply all the preventive measures described in FATF Recommendations 10 to 21:
- clarifications regarding the specific requirements applicable to the USD/EUR 1 000 threshold for occasional transactions, above which VASPs must conduct customer due diligence (Recommendation 10);
- the obligation to obtain, hold, and transmit required originator and beneficiary information, immediately and securely, when conducting VA transfers (Recommendation 16) (the ‘travel rule’)
Key areas where FATF updated Guidance focuses:
- clarify the definitions of VA and VASP to make clear that these definitions are expansive and there should not be a case where a relevant financial asset is not covered by the FATF Standards (either as a VA or as another financial asset),
- provide guidance on how the FATF Standards apply to stablecoins and clarify that a range of entities involved in stablecoin arrangements could qualify as VASPs under the FATF Standards,
- provide additional guidance on the risks and the tools available to countries to address the ML/TF risks for peer-to peer transactions, which are transactions that do not involve any obliged entities,
- provide updated guidance on the licensing and registration of VASPs,
- provide additional guidance for the public and private sectors on the implementation of the ‘travel rule’, and
- include Principles of Information-Sharing and Co-operation Amongst VASP Supervisors