FATF (Financial Action Task Force)

FATF is an inter-governmental organization consisting of over 40 countries including the U.S.A. and UK, and more than 30 organizations including the World Bank and IMF. Initially created to combat money laundering, the scope of focus has expanded to “protect the integrity of the financial system.” To achieve its goals it issues “recommendations” about how countries and financial institutions should confront these issues. While he FATF doesn’t set regulations themselves, if a country does not abide by them, they’ll usually face condemnation and scorn from the FATFs member organizations.

The organizations members consist of mostly financial regulators, including 2 from the US Dept. of the Treasury. Many members have been on the record calling for strict regulations on crypto.

It released its first set of regulations for crypto in 2019 including, collecting KYC and tracking transactions over $1000, in accordance with its travel rule to fight money laundering, terrorist financing, and other financial crimes.

The latest list of recommendations (released October 2021) mostly centers around tightly restricting these items:

  • Privacy coins and projects
  • Transactions from certain countries
  • Transactions from Anti-FATF Areas
  • Loosely defined “suspicious” transactions
  • Large transactions
  • Strange user profiles
  • Origin of user money

The ecosystem, as new as it is, has not yet implemented many of these recommendations, and the enforcement of course, will be thrust upon the governments of countries in which the companies reside. Meanwhile, several countries are already considered crypto tax havens (such as Switzerland) and have been adjusting laws to help adopt this growing technology and accommodate development – in turn, attracting even more companies.