Last year, the Financial Action Task Force (FATF) asked global jurisdictions to adopt its anti-money laundering, or AML, guidelines for crypto. As the apparent deadline is just a few weeks away, some regulation experts believe that the deadline is not the case, while the actual adoption is a matter of years.
On May 12, global legal and regulatory experts alongside executives in the crypto industry gathered at a Consensus: Distributed panel to discuss the FATF’s crypto guidelines.
Travel rule’s June 2020 deadline “is a bit of a myth”
At the virtual event, Siân Jones, a convener of the Joint Working Group (JWG) for InterVASP Messaging Standards and a senior partner at XReg Consulting, argued that the June 2020 deadline for the guidelines “is a bit of a myth.”
Also known as the “travel rule,” the FATF’s guidelines provide a number of AML and Know Your Customer measures to prevent cryptocurrencies from being used for money laundering. Introducing the travel rule in June 2019, the FATF said that the authority will examine the adoption of the guidelines in June 2020, writing:
“The FATF will monitor implementation of the new requirements by countries and service providers and conduct a 12-month review in June 2020.”
The requirement quickly became a “June 2020 deadline” in the crypto community. Jones, who says she used to be involved in FATF’s policy groups, outlined that the real adoption of the travel rule will trigger a huge amount of problems, claiming:
“The deadline, as it’s sometimes being put across, is a bit of a myth at one level. It is a requirement that came into play all the way back in 2019 […] But there will undoubtedly be some rising problems as countries implement a wider range of FATF requirements as well as they are applying the travel rule to VASPs.”
It may take years for 200 nations to adapt FATF’s requirements in their entirety
According to Jones, adoption of the guidelines poses a massive challenge because of varying regulation standards from one VASP in one jurisdiction to another. “You have one VASP in one country that is required to comply, but a VASP in another country that isn’t required to comply,” the expert explained.
Taking into account the complexity of the FATF’s travel rule implementation, Jones continued: “It can take a matter of years for all 200 nations around the world to implement the FATF’s recommendations in their entirety.” However, Jones expects a rapid rise in countries following their steps over the next six to 12 months. The exec also outlined that some countries like the United States, Switzerland and Japan have made some progress in adoption of the travel rule .
JWG released new crypto data exchange standard last week
The news comes after JWG for the InterVASP officially released a new technical standard to facilitate the exchange of data between VASPs on May 7. Known as “IVMS101,” the new standard represents a data model designed to enable a universal common language for communication of required originator and beneficiary information between VASPs.
The JVG was established in December 2019 by three major authorities including the Chamber of Digital Commerce, Global Digital Finance and the International Digital Asset Exchange Association. The IVMS101 data model is now being subject to ratification by these three authorities.