NEW DELHI: The Financial Action Task Force (FATF) is giving a strong push for the implementation of the so-called “travel rule” to track all cryptocurrency transactions to prevent misuse by terrorist groups ahead of the “No Money For Terror” meeting to be hosted by India this month.
Ministers, diplomats and counter-terrorism experts from the Egmont Group member countries are expected to attend the third edition of the “No Money For Terror” meeting to be held in New Delhi during 18-19. November. The Egmont Group brings together the Financial Intelligence Units (FIUs) from 166 countries to counter terrorist financing.
The misuse of virtual assets, especially cryptocurrency, and crowdfunding platforms will feature prominently in the upcoming meeting, just as it did during the special meeting of the UN Security Council Counter-Terrorism Committee (CTC) hosted by India on October 29. people with knowledge of the matter said. The meeting will also focus on ways to improve information sharing and cooperation between financial intelligence units (FIUs) of different countries, they said.
Although transfers through “hawala” channels remain the main form of terrorist financing, the FATF has warned of terrorist groups’ growing use of virtual assets and the dark web. The Paris-based multilateral financial watchdog formulated the first set of standards for virtual assets in 2019, but FATF vice-president Elisa de Anda Madrazo recently warned that implementation is “moving far too slowly”.
Out of more than 200 countries affiliated with the FATF, only 60 have begun to regulate and supervise the virtual assets sector. “The rest of the world doesn’t have regulation,” and more than 50% of countries “haven’t even started the process,” Madrazo said at the CTC meeting in New Delhi.
“This is very worrying because although standards take time to be implemented, there is a sense of urgency here. Until most countries implement these new rules, it will not be possible to start implementing the travel rule,” she said with reference to the proposal for tracking all cryptocurrency transactions, including detailed information about senders and receivers.
FATF’s “travel rule” requires the private sector, including virtual asset providers, to obtain and share information about senders and receivers with all transfers, just as is done in the case of wire transfers.
The FATF’s third review of the global implementation of its 2019 Virtual Asset Recommendations, issued in June this year, said countries had made “only limited progress” in implementing the travel rule.
As of March 2022, only 29 out of 98 countries that responded to the FATF “reported having adopted legislation on travel regulations” and only 11 countries had “initiated enforcement and oversight measures”.
Madrazo further warned of the urgency for countries to regulate the virtual assets sector to tackle “the risk of becoming a safe haven for online terrorism”.
Although the technological tools exist to address threats, “this will not happen if governments do not invest in this change”, she said.
The people quoted above said the “No Money For Terror” meeting, which is being organized by India’s Ministry of Home Affairs with the support of the Ministry of External Affairs, will be a useful platform to help create a coordinated global response to the misuse of cryptocurrency and virtual assets from terrorists.
The meeting will also focus on technical, legal and regulatory matters related to countering terrorist financing, the people said. It will also build on the work done during the UN CTC meeting, they added.