What is FATF guidance?

This FATF Guidance aims to provide support in designing Anti-Money Laundering and Terrorist Financing (AML/CFT) measures that meet the goal of financial inclusion, without compromising the measures that exist for the purpose of combating crime.

What qualifies as virtual currency?

Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value. Bitcoin can be digitally traded between users and can be purchased for, or exchanged into, U.S. dollars, Euros, and other real or virtual currencies.

Is virtual currency same as Cryptocurrency?

Digital Currency Defined Examples of digital currencies include cryptocurrencies, virtual currencies, central bank digital currencies and e-Cash. Digital currencies exhibit properties similar to other currencies, but do not have a physical form of banknotes and coins.

What is VASP FATF?

On October 28, the Financial Action Task Force (FATF) released a final version of the updates to its 2019 Guidance for a Risk-Based Approach for Virtual Assets and Virtual Asset Service Providers (VASPs), which bear on anti-money laundering (AML), information gathering, reporting and other obligations.

What are the examples of virtual currency?

Examples of virtual currencies include Bitcoin. Operating on blockchain technology, Bitcoin is set to disrupt the currency market. Invented in 2008, Litecoin, and XRP. Digital currencies are stored in and transacted through designated software, applications, and networks in digital form.

How do I report virtual currency on my tax return?

A disposal of “virtual currency that was held as a capital asset through a sale, exchange, or transfer” must be reported on Form 8949 and on Schedule D, as is the case of sales of any other type of capital asset.

Who regulates virtual currency?

Crypto exchanges in the United States fall under the regulatory scope of the Bank Secrecy Act (BSA) and must register with the Financial Crimes Enforcement Network (FinCEN). They are also required to comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) obligations.

What is an example of virtual currency?

Who are virtual asset providers?

The FATF defines a “virtual asset service provider” or VASP as: [A]ny natural or legal person … that conducts one or more of the following activities or operations for or on behalf of another natural or legal person: Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.

What is FATF risk based approach?

A risk-based approach means that countries, competent authorities, and banks identify, assess, and understand the money laundering and terrorist financing risk to which they are exposed, and take the appropriate mitigation measures in accordance with the level of risk.

What is the FATF and how does it affect virtual assets?

The FATF strengthened its standards to clarify the application of anti-money laundering and counter- terrorist financing requirements on virtual assets and virtual asset service providers.

What is the FATF’s stance on cryptocurrencies?

The FATF has been closely monitoring the developments in the cryptosphere and in recent years has seen the first countries start to regulate the virtual asset sector, while others have prohibited virtual assets altogether. However, as yet, the majority of countries have not taken any action.

What does the guidance say about Virtual Asset Services?

The guidance, which benefited from dialogue with the private sector, also includes examples of national approaches to regulating and supervising virtual asset activities and virtual asset service providers to prevent their misuse for money laundering and terrorist financing.