FATF Asks Countries To Introduce Travel Rule Legislation

As reported by the Financial Action Task Force (FATF), eleven out of up to ninety-eight targeted jurisdictions have initiated the implementation of the standards to combat the Anti-Money Laundering (AML), CFT, or Terrorism-related activities.
On Thursday, an update was released in which the enforcement of the standards set on the behalf of the FATF over Virtual Assets as well as Virtual Asset Service Providers was discussed. In the very update, the FATF mentioned that a huge number of jurisdictions analyzed by the Global Network thereof since June previous year still demand substantial or average enhancement in compliance with AML/CFT standards according to the travel rule.
As per the FATF, nations moving ahead to implement the respective requirements just made limited progress during the previous year, as out of up to 98 answering jurisdictions just 29 have reported to have approved legislation dealing with the travel rule, while eleven declared having initiated the enforcement as well.
Though 1/4th proportion of answering jurisdictions is at the moment involved in the procedure of approving the appropriate legislation, nearly 1/3rd (thirty-six out of the total 98) remained unsuccessful in initiating the enforcement of the Travel Rule, as disclosed by the FATF. This opening has left VASPs and Vas vulnerable to manipulation, and points toward the immediate requirement for these jurisdictions to speed up the process of enforcement and implementation.
The institution further revealed that firms operating within the private space had shown some advancement in providing solutions to assist in abiding by the travel rule along with taking the preemptive moves to guarantee interoperability with the rest of the solutions. Nonetheless, it was hinted by the FATF that rapid implementation of the respective solutions is necessary, in line with the noteworthy hazard that the ransomware actors can abuse Vas to be advantaged in payments as well as funneling illegal funds via Virtual Asset Service Providers (a.k.a VASPs).
Among the rest of the developments that have taken place in the recent year, others take into account the evolution of the decentralized finance (DeFi) as well as the non-fungible token (NFT) projects that are labeled by the FATF as a difficult zone in terms of the travel rule’s implementation. The institution referred to a report by Chainalysis that was published in February proposing that hazards posed by criminal misuse are constantly causing the execution of illegal transfers within the DeFi sector leading the way toward wash trading and money laundering.
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