Global money-laundering watchdog, the Financial Action Task Force (FATF), has said that the U.S. is not fully compliant with its crypto recommendations.
“Minor deficiencies” remain, said the FATF in a report published Tuesday. For instance, U.S.-registered money services businesses (MSBs) keep detailed records for transactions of $3,000 or more, as opposed to $1,000 required in the FATF recommendations.
“This higher threshold is not clearly supported by low ML/TF [money laundering/ terrorist financing] risks,” said the FATF.
Further, the U.S. does not specifically identify “higher risk” virtual asset service providers (VASPs), as they are largely covered under the broader MSB regime, according to the FATF.
“Therefore, it is not entirely clear whether the current approach is sufficiently risk focused, especially since only 30% of all registered CVC [convertible virtual currencies] providers have been inspected since 2014,” said the FATF.
“On this basis, the U.S. remains rated as Largely Compliant” with crypto “recommendation 15,” said the watchdog.
The FATF rates countries on four levels: compliant, largely compliant, partially compliant, and non-compliant.
The recommendation 15, which came into effect last June, provides guidelines for crypto businesses “to prevent the misuse of virtual assets for money laundering and terrorist financing and the financing of proliferation.”
Crypto businesses, therefore, are required to “obtain and hold required and accurate originator information and required beneficiary information on virtual asset transfers, submit the above information to the beneficiary VASP or financial institution (if any) immediately and securely, and make it available on request to appropriate authorities.”
This is the so-called “travel rule,” which has been a longstanding requirement for global banks when sending each other money on customers’ behalf.