Financial Action Task Force (FATF)

The Financial Action Task Force is an intergovernmental organization established in 1989 by the G7 to combat money laundering, terrorist financing, and other financial crimes. FATF develops international standards and best practices that member countries adopt into their domestic regulations. The organization publishes recommendations that serve as the global benchmark for anti-money laundering (AML) and counter-terrorist financing (CTF) efforts. In the crypto space, FATF's guidance has become increasingly influential, particularly its 2019 guidance on virtual assets and virtual asset service providers (VASPs), which established the "travel rule" requiring exchanges to share customer information during transactions. Example: In 2023, FATF's updated recommendations directly influenced the European Union's Markets in Crypto-Assets Regulation (MiCA), which implemented stricter VASP oversight and mandatory AML/KYC requirements across all EU member states, serving as a template for how crypto regulation could be harmonized internationally. Why it matters for crypto regulation: FATF recommendations shape how countries regulate cryptocurrency exchanges and custodians globally. Understanding FATF standards is essential for crypto businesses seeking international compliance and for regulators designing domestic frameworks that avoid being flagged as non-compliant jurisdictions.

Category: regulatory frameworks, compliance

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