Global Standards Body Urges Regulators to Step Up Scrutiny of Virtual Asset Service Providers

Financial regulators and supervisors should review their oversight of virtual assets (VA) and virtual asset service providers (VASP), impressing that they should step up their scrutiny over the risk of money laundering. 

In an updated guidance the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog and standards-setter, has impressed that VAs and VASPs should be supervised by competent national regulatory authorities, and not self-regulatory bodies. 

The guidance outlines how supervision of VAs and VASPs assists in compliance with international anti-money laundering standards. It also outlines how regulators should approach registration or licensing of VASPs, which have grown exponentially in recent years. Regulators, it says, should conduct risk-based supervision or monitoring, and have adequate powers, including to conduct inspections, compel the production of information and impose sanctions.

The guidance is expected to intensity regulatory scrutiny of VAs and VASPs and include them in the broader application of anti-money laundering laws. It should also lead to greater regulatory control over business registration and the identification of their beneficial owners. The new guidance is found here.