FATF to Reportedly Include Cryptocurrencies as Graylisting Factor

Skirting international sanctions and bypassing financial crackdowns has been made somewhat possible by the use of cryptocurrencies. Now, the Financial Action Task Force (FATF) wants to make sure that this is not happening moving forward. This is why the international watchdog is reportedly going to add cryptocurrencies to its list of criteria when it considers whether a country or a jurisdiction should make the regulator’s gray list.

No Official Confirmation, But Smart Long-Term Decision

Gray list entries are usually those countries and jurisdictions that need additional monitoring. Many of the suspected crimes are associated with the gambling industry, and Malta and Cambodia have both been part of the list. FATF chiefly focuses on anti-money laundering and terrorist financing rules, and it insists that there is global compliance.

Should there be evidence to the opposite, the FATF then places a jurisdiction on its gray list, which means the withdrawal of foreign capital and generally bleaker long-term economic prospects. The FATF has not confirmed whether this is true and whether cryptocurrencies will indeed be used to determine a jurisdiction’s status. The FATF recently issued advice on AML and CTF compliance to European Union Member States and highlighted the increased concerns that the gambling industry could be used to facilitate illegal activities.

Graylisting affects a country’s overall rating and economic prospects. Cryptocurrency penalties, though, Al Jazeera reports, will not kick in immediately nor would they be immediately used as the basis of graylisting. The FATF has in fact not given any official statement to the matter, and simply said that it does not comment on media speculation.

However, FATF would be remiss not to consider cryptocurrencies as a qualifying factor given how popular they are and how easy it could be for some parties to use them to skirt sanctions. Most recently, Reuters confirmed that Binance facilitated transactions for an Iranian cryptocurrency exchange, and allegedly did so knowingly at the time.

The FATF has no real enforcement authority, but its observations are usually respected by the global community, meaning that any non-compliant jurisdiction can expect to suffer reputation damage and see divestment of capital from it should it fall on the gray list. Among the big nations that host gambling or have had issues with their gambling industries to be featured on the FATF’s gray list are also the Philippines.