14 October 2020
Chair, thank you for giving me the floor.
Excellences, Ministers and Central Bank Governors
In June last year the FATF created the first global binding standards for the cryptocurrency industry. Building on this, we have submitted our FATF Report to G20 on So-called Stablecoins on the money laundering and terrorist financing risks linked to so-called stablecoins for your attention at this meeting.
The report finds that so called stablecoins display many potential ML/TF risks in virtue of their potential for anonymity, global reach and layering of illict funds. The report also states that our new FATF Standards clearly apply to so-called stablecoins which means that entities involved in any so-called stablecoin arrangements - such as central developers, governance bodies, wallet providers, exchange and transfer service providers - will have to follow AML obligations depending on their specific role, for example for customer due diligence including identification, risk management and suspicious transaction reporting.
However, to date, only 25 of the FATF’s 39 members, including 12 G20 members, have transposed the revised FATF Standards into their domestic frameworks.
It is clearly important that all countries make these changes as a priority due to the global nature of this technology that can be exploited by those engaged in illicit activities. More than 200 jurisdictions have commited to implement our standards. The FATF, together with its regional bodies, will assess them against the revised standards and report whether the standards are implemented fully and effectively in the respective jurisdictions.
By leading by example, the G20 can spur other countries into action with implementing our standards. So, I ask you today to do so.
The virtual asset sector is changing rapidly. Therefore, the FATF will continue to closely monitor their development and any emerging risks.
We will also continue to give guidance to countries and the private sector to effectively implement and enforce their obligations. And we will continue to improve global cooperation and information sharing at all levels concerning virtual assets.
Managing these new technological risks is linked to the broader work of the FATF in combatting unlawful money flows, of which I want to quickly mention two.
Early on in the COVID-19 crisis, the FATF flagged the increasing risk of criminals exploiting the situation, for example by obtaining financial aid by fraud or by embezzling public money. The FATF’s risk-based standards are crucial in a situation like this. They allow funds to be brought swiftly and efficiently to those in need – but also guard against funds wrongly falling into illegal channels.
Secondly, we are also exploring the opportunities of digital transformation, which can potentially produce faster and more effective systems to detect unlawful practices. I think this fits in very well with the G20’s work on digitisation and in substance can make a difference.
Everyone here knows there are huge challenges. On behalf of the FATF, allow me to thank the G20 for their continous support to the FATF’s fight against money laundering and terrorist financing. Together, we can make the financial system safer and reduce crime.
Thank you, Chair.