The Financial Action Task Force (on Money Laundering), headquartered in Paris, is an independent intergovernmental organization. The organization has now issued guidelines on Bitcoin transactions and even warned about the potential it has with respect to money laundering. The report contains the detailed analysis the organization has made.
The FATF or The Financial Action Task Force has published the said report as a guide for using digital currencies titled “Guidance for a Risk-Based Approach to Virtual Currencies.” According to local media the report includes discussions about the benefits of digital currencies as well as potential risks of money laundering and terror financing.
It has come to notice that the report is essentially the conclusion to the recent meeting held at Brisbane where 34 member nations and two regional organizations i.e. the European Union and the Gulf Co-operation Council came to discuss policies, regulations and compliance for digital currencies. Nonetheless, the 48-page extended report covers comprehensive issues.
For instance, in the report, the FATF described Bitcoin payment services and products as potential tools for money laundering. The organization announced that digital currency service providers and companies must identify and notice potential risks of using the currency. Additionally, FATF heavily emphasized the importance of its member nations.
The organization claims that to understand the technicalities and the technology behind digital currencies such as Bitcoin, it is essential to have regulations. The group encouraged its nations to introduce regulations and restrictions for digital currency exchanges that are similar to that of traditional financial establishments.
Thus, requesting all digital exchanges to register and subject to the same regulations of other financial institutions and money transfer businesses, the group wants all the members to have a fundamental understanding about Bitcoin regulation. The FATF’s “guidelines” of Bitcoin are predicted to have the same effect as BitLicense.
Bitcoin can Play Important Role as PayPal
The report says that virtual currency has the potential to improve payment efficiency and reduce transaction costs for payments and fund transfers. It cites the example that Bitcoin functions as a global currency that can avoid exchange fees, is currently processed with lower fees/charges than traditional credit and debit cards.
The report goes to great extent to appreciate the role of Bitcoin when it says that it may potentially provide benefit to existing online payment systems, like PayPal. However, it also concludes that persistent connection of Bitcoin to money laundering and terrorist financing cases cannot be ruled out.
To contact the reporter of this story: Deepak Tiwari at email@example.com