inner blog--fatf-strategic

The FATF’s Strategic Considerations’ Impact On VASPs

20 Jul, 2022

We live in a time where we are no longer hindered by geographical boundaries; instead, we have an instantaneous connection to the world - the Internet. This is not only beneficial for us but for criminals too. 

The disguise of illegal activities, terrorism financing, online fraud, the evasion of sanctions, and ransomware attacks are just some of the numerous online crimes that need to be combated on a daily basis.  

On a positive note, the response to these online crimes has also been on the rise. Law enforcement agencies are evolving, and so are their technological abilities to oppose these acts. With help from blockchain analytics, data, machine learning and so forth, authorities have been able to combat these crimes.

There are some areas where these agencies do fall short. However, the Financial Action Task Force’s (FATF’s) document AML/CFT Digital Strategy for Law Enforcement Authorities tackles these aspects with pressing questions an agency can ask itself before starting on a digital quest. 

For virtual asset service providers (VASPs) that play by the rules - if you are reading this, you are probably part of that virtuous group - this is good news. If law enforcement agencies review their digital strategies, this could result in faster solutions to preventing crimes and lead to a safer crypto environment. 

Doing so enables agencies to better understand the topics they are helping to protect and push for enforcement of the most relevant financial crimes affecting businesses and their customers. Positive outcomes on all fronts. 

Let’s explore their recommendations:

The FATF’s Overall Strategic Considerations 

What do law enforcement agencies need to ask themselves, according to the FATF’s considerations, before starting their digital transformation? More importantly, how do these changes affect VASPs? 

As per the FATF, law enforcement agencies need to ask themselves:

  1. Do you have a problem statement? 

  2. Is everyone on the same page? 

  3. Are there clear ideas or guidance as to how the digital tools can get the most from the existing data? 

  4. Is there a clear plan of action?

  5. What sort of strategy is in place? 

  6. What sort of strategy review is in place? 

  7. Does the available technology suit the plan? 

  8. Is the data standardised? 

  9. Does a team need to be created? 

  10. Does the team have the right skills? 

The FATF’s Strategic Considerations’ Impact On VASPs

With the FATF’s guidance, VASPs can expect a better technological know-how from law agencies. This knowhow can possibly be translated into:

  1. Clear strategies equate to clear goals. 

  2. Continuous review of strategies means law agencies can modify their approaches as the ecosystem develops.

  3. Better technology in place means faster outcomes. 

  4. A more specialised and focused team leads to better outcomes.

  5. Standardised data means usable data. 

  6. Another critical factor is data sharing - does it match the country's national AML/CFT priorities and risk profile?

With a faster and better-adapted team of law enforcement agents to deal with financial crime, especially within crypto, potential threats can more efficiently be prevented, and criminals stopped. 

The end result is a safer crypto environment, a goal we all collaborate for: from the global watchdog to every AML analyst in crypto firms.

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