FATF to move cryptocurrency operators from "dark shadows" as it calls for stronger regulations

The Financial Action Task Force (FATF) will focus on combating money laundering and terrorism financing by strengthening cryptocurrency regulations for its member nations.

U.S. Secretary of the Treasury Steven Mnuchin said the new policy will require crypto-asset service providers to follow the usual procedures of traditional institutions in complying with anti-money laundering (AML) and combating the financing of terrorism (CFT) protocols.

Under the new measures, the intergovernmental organization wants cryptocurrency operators to obtain the identity of the senders and recipients of crypto funds, conduct proper due diligence to ensure they are not engaging in illegal activities, and develop risk-based programs.

“By adopting the standards and guidelines agreed to this week, the FATF will make sure that virtual asset service providers do not operate in the dark shadows,” Mnuchin said on Friday during his closing remarks at the 2019 Orlando Plenary of FATF, in Orlando, Florida.

“This will enable the emerging FinTech sector to stay one-step ahead of rogue regimes and sympathizers of illicit causes searching for avenues to raise and transfer funds without detection.”

Mnuchin also noted that he organized a working group with the Federal Reserve and other regulators to ensure cryptocurrencies are used for legal purposes only, saying they will prevent digital currencies from becoming “equivalent of secret numbered accounts.”

According to Bloomberg, the FATF, which comprises countries from the United States to China and bodies such as the European Commission, will carry out a review of how countries are implementing the new policies in June 2020. It further added that crypto-asset operators that fail to comply may be subject for closure or penalties.

Earlier this week, reports that the FATF will release a note to clarify how participant nations should manage the digital assets sector surfaced. The new rules are allegedly applicable to businesses dealing with tokens and cryptocurrencies, including crypto exchanges, custodians and crypto hedge funds.