Tackle Heightened Risks Relating To Virtual Assets

Contact Us

Highlights of FATF’s Interpretive Note on Recommendation 15

Screening virtual asset service providers

Once seen as risky and likely involved in illegal activities such as money laundering and terrorism financing, Virtual Asset Service Providers (VASPs) have long been blocked from the mainstream financial system. The lack of access and their alleged connection to financial crime have made it difficult for them to conduct business and limited their involvement in traditional industries.

But that situation is rapidly changing. Virtual assets have steadily been gaining legitimacy around the world. At the same time, they’ve become more prevalent, finding their way into various underserved markets, gaining favor among their customers and cementing their position.

Recently the Financial Action Task Force (FATF) released an Interpretive Note on Recommendation 15 that provides guidance on how VASPs should be treated with regard to regulations and also how financial institutions should handle VASPs. The Interpretive Note is expected to accomplish multiple objectives:

  • Increase regulations of VASPs
  • Standardize best practices for regulating VASPs
  • Raise the profile and legitimacy of VASPs
  • Increase global security by requiring increased due diligence by VASPs and of VASPs
  • Limit access for illegitimate operators

The FATF Interpretive Note recommends treating VASPs in the same way as traditional financial institutions. They must comply with policies and procedures related to Know Your Customer (KYC), Anti-Money Laundering (AML) and Counter Terrorism (CTF)

VASPs should apply those standards when onboarding new customers and screening their existing customer base. They need to be looking at their clients’ physical identity and checking for:

  • Sanctions
  • Enforcements
  • Adverse media
  • State-owned entity
  • Politically Exposed Persons (PEP) status

VASPs should also be monitoring transactions. When they detect suspicious behavior by any of their clients, they must file Suspicious Activity Reports (SARs), much as traditional financial institutions must do.

The increased regulation of the Interpretive Note will allow VASPs to operate in a safer business environment and anyone doing business with VASPs will be assured that they are dealing with legitimate operations that play by the rules.

Learn about the implications of FATF’s Interpretive Note on Recommendation 15 in our new infographic, “What Increasing Regulation Means for Virtual Asset Service Providers.”

Access Full Infographic Here

Download PDF
Risk Assessment for Virtual Asset Service Providers in Asia

eBook: FATF regulatory expectations for Virtual Asset Service Providers

Learn best practices for stronger due diligence screening and ongoing monitoring to optimize your defense against money laundering and terrorist financing risks.

Physical and Digital Identities verification for virtual asset service providers

eBook: Customer Risk Assessment for Virtual Asset Service Providers

Learn how you can detect and deflect more fraud with multi-dimensional physical and digital identity intelligence.

Have Sales Contact Me

Products You May Be Interested In