In recent years, the U.S. has done quite a bit to get the digital asset space under control, implementing common sense regulations, and reigning in initial coin offerings (ICOs). That work has paid off, as the Financial Action Task Force (FATF) has rated the country “largely compliant” with its revised criteria for preventing money laundering and terrorist financing (AML/CTF).
The FATF, which sets international standards for AML and CTF policing, published its assessment of the U.S. on March 31. It looked at how the country did with its banking rules, and implementing and enforcing laws and regulations.
This improvement came thanks to several new measures taken across the FATF’s 40 metrics for assessing a country’s AML and CTF compliance. The group notes the U.S. has taken a more serious approach to customer due diligence (recommendation 10), improving their rating in that area. Otherwise, with revised criteria issued by the FATF, the ratings for 39 other metrics remained at their previous levels, but the group noted progress has been made in at least seven areas (recommendations 1, 12, 16, 20, 24, 25 and 28).
That’s not to say there isn’t plenty of room to improve. They remain behind in the area of “New Technologies,” or recommendation 15. Minor deficiencies, like a lack of records for transactions under $3,000, may allow criminals to slip around current laws. “This higher threshold is not clearly supported by low ML/TF risks,” FATF wrote.
The FATF also wants U.S. regulators to step up their game in investigating convertible virtual currency (CVC) businesses. Their strategy “does not specifically identify higher risk virtual asset service providers (VASP),” making their “various” examinations insufficient. “Therefore, it is not entirely clear whether the current approach is sufficiently risk focused, especially since only 30% of all registered CVC providers have been inspected since 2014,” they wrote.
While the FATF overall praised U.S. regulators’ efforts to regulate digital currencies, the bottom line was, more is needed.
But the effort is clearly there, regulators like the Securities and Exchange Commission (SEC) have firmed up a lot of their definitions, and have gone after ICOs that try to skate around what is legal, and what isn’t. With the FATF keeping watch, and calling out any gaps that could allow criminals to prosper, things look like they can only get better.
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