Money laundering is one of the world’s biggest fears when it comes to cryptos. So, to help combat this, the Financial Action Task Force (FATF) has announced it will be launching global anti-money laundering (AML) standards for cryptos next month. There are already global standards in place for fiat currencies, but these measures are all too easy to bypass. FATF has learned its lesson and is preparing the drop stringent anti-money laundering policies on the crypto world. Coupled with Know Your Customer (KYC) checks, money laundering will quickly become a thing of the past.
Current Standards are Outdated and Patchy
Existing standards are full of flaws and rely too heavily on humans to do the right thing. Due to the nature of digital currencies, automatic checks can be put in place by using smart contracts to trace the source of funds back to their origins. This will help stamp out corruption and money laundering once and for all. The patchy regulations that are currently in place leave lots of loopholes and ways for people to launder fiat currencies relatively easily.
Japan Steaming Ahead
When it comes to implementing anti-money laundering standards for the crypto world, Japan is miles ahead of the competition. In 2017, Japan launched a number of crypto related laws, some of which related to anti-money laundering. Since then, Japan has seen very little money being laundered in the country through cryptocurrencies. Japan really is taking regulation very seriously, so seriously in fact that the Japanese Financial Services Agency has had to hire 12 new members of staff to keep up with demand for regulation.
The UK Tells Europe Who’s Boss
Despite the UK’s shaky relationship with European regulators following its Brexit process, it has handed a new set of AML standards to Europe that are more comprehensive than Europe’s own laws. The new set of legislation that the UK has handed to Europe means that any financial services firms that wish to deal with UK based investors need to comply with the UK’s higher AML standards. This higher AML standard could easily be ported into the UK’s crypto regulations.
AML standards are necessary to ensure there is a solid foundation for a global crypto economy. By standardizing AML procedures globally, the crypto community can work at stamping out nefarious uses for cryptos and work towards making the world a safer and financially cleaner place.