The Financial Action Task Force has warned that offshore crypto service providers (oVASP) could facilitate illicit financial activity such as money laundering and sanctions evasion, Cointelegraph reported on Wednesday.
FATF said offshore firms exploit regulatory differences to evade supervision and neutralise anti-money laundering (AML) and counter-terrorism financing (CTF) rules. It singled out multinational operating models as a problem.
It said a model in which a firm is incorporated in one country, runs infrastructure in another and provides online services to customers worldwide is creating regulatory gaps.
FATF stressed that countries should strictly supervise offshore crypto firms that provide services to their markets. It recommended strengthening registration and licensing requirements and expanding cross-border cooperation between regulators and law enforcement agencies.
The report is also linked to a recently released FATF report on stablecoins and unregulated wallets. FATF has pointed out that peer-to-peer transfers conducted without regulated intermediaries such as exchanges or custodians weaken AML monitoring, and said countries should assess this and introduce safeguards.
Chi-gyu Hwang
delight@d-today.co.kr