Due to their anonymity or pseudonymity, digital assets are perceived as entailing the risks of money laundering and financing terrorism. In October 2018, the Financial Action Task Force (FATF) adopted changes to its recommendations on financial activities involving digital assets, adding the definitions “virtual asset” (VA) and “virtual asset service provider” (VASP).
Since then, the FATF has adopted a risk-based approach to VA activities or operations and VASPs. This new approach includes the supervision of VASPs to ensure compliance in the areas of licensing and registration and preventive measures such as customer due diligence, transaction reporting and record-keeping. It also includes monitoring VASPs to combat money laundering and the financing of terrorism. Doing so enhances the effectiveness of sanctions and other enforcement measures, as well as international cooperation. VASPs, therefore, have the same full set of obligations as financial institutions.
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