Crypto firms still not widely adopting 'travel rule,' says FATF deputy

In 2019, the Financial Action Task Force asked jurisdictions worldwide to adopt its regulatory guidelines for virtual assets.

The FATF is an intergovernmental organization tasked with combating money laundering.

Its 2019 directives for regulating crypto, which include a controversial section dubbed the "Travel rule," are designed to mitigate illicit uses of virtual assets, and to bring the sector into line with traditional banking regulations.

When it comes to crypto businesses-known formally as "Virtual asset service providers," or VASPs-Lewis said that their adaptation to the travel rule and wider FATF framework remains "Relatively nascent."

The travel rule is "Not yet being implemented globally or effectively" in the private sector, he stressed.

There has been, he says, increased use of crypto to move illicit funds during the pandemic.

There is evidence that crypto is being tapped more frequently by professional money laundering networks.

While the total value of crypto used for illicit activities remains small, it is being exploited to launder money from the sale of drugs and illicit arms, child exploitation, human trafficking and sanctions evasion, Lewis says.

The organization appears particularly concerned about the various mechanisms and tools that are being used to increase privacy, including decentralized exchanges, so-called privacy coins, tumblers and mixers.

Lewis indicated that the FATF plans to publish a second review of the implementation of its guidelines worldwide in June 2021, following its first published review in June of this year.