FATF Red Flags for Virtual Assets

On Sep. 14, FATF issued report to help detect suspicious transactions.

  • FATF issued report, virtual assets-red flag indicators of money laundering and terrorist financing, to help NCAs detect if virtual assets are being used for criminal activity.
  • Follows FATF Jun. 2019 issued guide for virtual assets AML framework, see #61915.
  • Virtual Assets
  • Virtual assets use innovative technology to swiftly transfer value around the world and have many potential benefits, including making payments faster and cheaper.
  • Anonymity associated with them attracts criminals, who use virtual assets to launder proceeds from many offences, such as drugs trade, illegal arms smuggling, fraud, tax evasion, cyber attacks, sanctions evasion, child exploitation and human trafficking.
  • Red Flag Report
  • Based on over 100 case studies collected by FATF global members, report highlighted most important red flag indicators that could suggest criminal behaviour.
  • Key indicators focus on technological features to increase anonymity, like peer-to-peer exchanges websites, mixing/tumbling services, anonymity-enhanced cryptocurrencies.
  • Geographical risks, where criminals exploit countries with weak/absent, national measures for virtual assets; wealth, funds source, which can relate to criminal activity.
  • Irregular, unusual, uncommon transaction patterns which can suggest criminal activity.
  • Transaction size, if the amount and frequency has no logical business explanation.
  • Sender or recipient profiles - unusual behavior can suggest criminal activity.
  • Benefits of Report
  • Assist virtual asset service providers, financial institutions, designated non-financial businesses, professions, other reporting entities detect, report suspicious transactions.
  • Provide useful information for financial intelligence units, law enforcement agencies, prosecutors and regulators to analyse suspicious transaction reports.
  • And it will help reporting entities monitor compliance with AML/CFT controls.
  • Brief Guides
  • Alongside report, FATF published brief guides, summarizing main report.
  • Virtual assets red flag indicators for financial and non-financial sectors.
  • Virtual assets red flag indicators for virtual asset service providers.
  • And virtual assets red flag indicators for the public sector.
  • Sep. 21, 2020 SIN MAS
  • On Sep. 21, 2020, SIN MAS highlighted the FATF report on virtual assets red flags.

Regulators AbuDGM; FATF; SIN MAS
Entity Types Bank; Corp; Exch; Fiduciary; MSB
Reference PR 9/21/2020; Rp, PR 9/14/2020; Cyber
Functions AML; Anti-Bribery; Compliance; Financial; Legal; Operations; Reporting; Risk; Technology
Countries Global Regulator
Products Banking; Clearing; Cryptocurrency; Deposits; Loan; Payments
Regions Global
Rule Type Guidance
Rule Date 9/14/2020
Effective Date 9/21/2020
Rule Id 86097
Linked to Rule :61915
Reg. Last Update 9/21/2020
Report Section AML & Enforcement

Last substantive update on 09/15/2020