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The Financial Action Task Force (FATF), a United Nations-established body combatting monetary crimes and terrorism financing, has issued an urgent call for worldwide reinforcement of the "Travel Rule" to tackle criminal activities involving digital currencies. The call emerged from recent meetings held at FATF's headquarters in Paris.
During these meetings, it was revealed that a majority of the surveyed parties had not taken significant action to implement the Travel Rule. This regulation, designed to prevent funds from reaching sanctioned individuals or entities, has yet to be properly implemented on a global scale.
The regulatory gaps present an opportunity for criminals to exploit the absence of laws and further their illicit activities. Consequently, FATF is calling for the immediate implementation of anti-money laundering (AML) and counter-terrorism financing (CTF) regulations on crypto-related activities to address these "significant loopholes."
However, according to a survey conducted by FATF in March 2022, only 29 out of 98 jurisdictions surveyed had fulfilled the requirements of the Travel Rule. Furthermore, only a small number of these jurisdictions have actually begun enforcing the rules.
The Travel Rule was introduced in 2019 to combat the anonymity of illicit cryptocurrency transactions. Its latest update was agreed upon in June 2022 during FATF meetings. An upcoming report by FATF, scheduled for release on June 27, will highlight North Korea's alleged illegal virtual asset activities, which purportedly fund its Weapons of Mass Destruction program.
The report also aims to shed light on "emerging risks" in the crypto world, including stablecoins, decentralized finance, nonfungible tokens (NFTs), and peer-to-peer transactions. The objective is to pressure member countries to take more robust steps to close existing regulatory gaps that criminals are exploiting with impunity.
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