Thought Leadership

FATF's latest report shows slow global progress on Recommendation 15

Author
Lo Furneaux
Digital Content & Operations Coordinator

The Financial Action Task Force (FATF) recently shared its latest assessment of global progress towards implementing Recommendation 15, which applies anti-money laundering and counter-terrorist financing (AML/CFT) measures to virtual assets (VA) and virtual asset service providers (VASPs).

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FATF Recommendation 15

Countries and financial institutions should identify and assess the money laundering or terrorist financing risks that may arise in relation to (a) the development of new products and new business practices, including new delivery mechanisms, and (b) the use of new or developing technologies for both new and pre-existing products. In the case of financial institutions, such a risk assessment should take place prior to the launch of the new products, business practices or the use of new or developing technologies. They should take appropriate measures to manage and mitigate those risks.

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To manage and mitigate the risks emerging from virtual assets, countries should ensure that virtual asset service providers are regulated for AML/CFT purposes, and licensed or registered and subject to effective systems for monitoring and ensuring compliance with the relevant measures called for in the FATF Recommendations.

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FATF's latest report finds that while some jurisdictions have made progress in adopting their recommended AML/CFT regulation, global implementation still lags significantly behind.

Though many of the “materially important” jurisdictions have implemented the core measures, several governments have yet to take meaningful steps towards regulating the sector, leaving 75% of jurisdictions partially or non-compliant with the FATF’s requirements.

This percentage has remained unchanged since the previous assessment in 2023, indicating a lack of progress in global regulatory adherence within the virtual asset space.

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If this slow progress continues, virtual assets and VASPs will remain susceptible to exploitation by scammers, terrorist groups and other illicit actors, enabling activities such as pig butchering, human trafficking, and Fentanyl distribution to persist unchecked.

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Read FATF’s full report:

https://www.fatf-gafi.org/content/dam/fatf-gafi/recommendations/2024-Targeted-Update-VA-VASP.pdf.coredownload.inline.pdf

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‍Read a summary:

https://www.fatf-gafi.org/en/publications/Fatfrecommendations/targeted-update-virtual-assets-vasps-2024.html

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‍Explore this topic further in our conversation on Seize & Desist with the FATF’s former Executive Secretary David Lewis:

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