The Financial Action Task Force (FATF), an international organization tasked with addressing terrorism financing and money-laundering, is planning to develop a system to monitor cryptocurrency transactions.
As reported by Nikkei Asian Review, a media outlet based in Tokyo, the system, among other things, will collect information about cryptocurrency users. However, although the FATF will design and manage the development of the system, 15 countries comprising of the G7 members (Germany, Japan, Canada, France, Italy, the United States, and the United Kingdom), Singapore and Australia, will develop the system.
The system will be managed by the private sector
According to Nikkei:
“The goal is to draw up detailed measures by 2020 and to have the system up and running a few years later. Once in place, the system would be managed by the private sector. Many countries have not yet created regulatory regimes for cryptocurrencies, so international cooperation may speed up the development of legal measures.”
Earlier, FATF had recommended crypto regulations to guide its member nations when regulating cryptocurrency-based firms. According to the recommendations, when crypto-focused businesses engage in money transmission, they should capture a sender’s name, account number, geographical address or a government-issued ID number. For the recipient, the crypto business should capture the recipient’s name and account number.
Also, they should:
“Obtain and hold required and accurate sender information and required recipient information and submit the information to recipient institutions. …Further, countries should ensure that the recipient institution… obtain and hold the required sender information and required and accurate recipient information.”
Japan leads with a legal framework
Notably, in 2017, Japan introduced a legal framework by developing a registry for cryptocurrency exchanges in the country. Unfortunately, with states regulating their crypto spaces differently, it has become difficult to have a unified crypto regulatory framework.
Fortunately, the new crypto monitoring system will have Asian countries leading the way. For example, FATF’s list of 37 member countries comprises of 10 key Asian countries (China, Hong Kong, India, Japan, Republic of Korea, Singapore, Saudi Arabia, Israel, Turkey, and the Russian Federation). Additionally, the list of 15 countries mandated with creating the new system already features Japan and Singapore.
Apart from a monitoring system, a ‘crypto SWIFT’ is on the way
Apart from being part of the team developing a crypto monitoring system, Japan is also reportedly developing a crypto payments system with the blessings of the FATF. According to Reuters, a media outlet, the ‘crypto SWIFT’ will mirror SWIFT, an international banking network.
Reuters added:“A team related to the inter-governmental Financial Action Task Force (FATF) will monitor its development and Japan will cooperate with other countries. It remains unclear how the cryptocurrency network would work. FATF in June approved the plan for establishing the network, which was proposed by Japan’s Ministry of Finance and the Financial Services Agency (FSA).”