FATF: Guidance for a risk-based approach to virtual currencies (June, 26th 2015)

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Virtual currencies have emerged and attracted investment in payment infrastructure built on their software protocols. These payment mechanisms seek to provide a new method for transmitting value over the internet. At the same time, virtual currency payment products and services (VCPPS) present money laundering and terrorist financing (ML/TF) risks. FATF made a preliminary assessment of these ML/TF risks in the June 2014 VC Report (key definitions and Potential AML/CFT Risks).
As part of a staged approach, The FATF has developed this Guidance focusing on the points of intersection that provide gateways to the regulated financial system, in particular convertible virtual currency exchangers. FATF will continue to monitor developments in VCPPS and emerging risks and mitigating factors to update this Guidance, to include, where appropriate, emerging best practices to address regulatory issues arising in respect of ML/TF risks associated with VCPPS.
This Guidance seeks to:

  • Show how specific FATF Recommendations should apply to convertible virtual currency exchangers in the context of VCPPS, identify AML/CFT measures that could be required, and provide examples; and
  • Identify obstacles to applying mitigating measures rooted in VCPPS’s technology and/or business models and in legacy legal frameworks.

Table of contents

  • Table of acronyms
  • Section I – Introduction
    • Background
    • Purpose of the guidance
    • Scope of the guidance
    • Structure
  • Section II - Scope of FATF standards
    • Initial risk assessment
    • FATF definitions
  • Section III – application of FATF standards to countries and competent authorities8
  • Section IV– application of FATF standards to covered entities
    • Potential solutions to compliance challenges
  • Section V - country (or group of countries) examples of risk-based approach to Vcpps
  • Appendix A virtual currencies - key definitions and potential aml/cft risks
    • Introduction
    • Key definitions:
    • Legitimate uses
    • Potential risks
    • Law enforcement actions involving virtual currency
    • Notes
    • Bibliography and sources
  • Appendix B how decentralised convertible virtual currency works as a
    • Payments mechanism
    • Introduction
    • Scope
    • Participating in the bitcoin network to send and receive bitcoins

Annex

  • FATF, “Guidance for a risk-based approach to virtual currencies”, June 26th 2015 (pdf, 608 K, 48 pp.)

See also

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