Revised FATF Guidance applicable to virtual assets and VASPs
In March of 2021, the Financial Action Task Force (FATF) issued proposed updated Guidance for a risk-based approach to virtual assets and Virtual Asset Service Providers (VASP) and opened a one-month public consultation allowing industry stakeholders to comment. They provide revised definitions and offers measures to prevent, to the most extent, possible money laundering and financing of terrorism-related risks. The updated guidelines clarify the definition of VASPs and effectively expands its scope broadly.
In its response to the public consultation, Adan expressed its preoccupations and made concrete proposals to address the specific risk profile of innovative products in decentralised finance. Its proposals include:
- improving surveillance of criminal activity on public blockchain networks by national authorities;
- applying reporting requirements on a case-by-case basis when stakeholders have effective control on decentralized applications;
- creating industry standards and best practices;
- avoiding unnecessary customer due diligence for individuals, developers and startups, which carries risks to data privacy and identity protection;
- refining the FATF’s risk analysis on VASPs and so-called “peer to peer transfers” to better mirror the market reality and granularity in activities’ risk profiles.