The guidance is in the form of a report titled ‘Guidance for a Risk-Based Approach to Virtual Currencies’ for closer monitoring of cryptocurrency exchanges.
The report discusses about various benefits associated with digital currencies and also the potential risks of money laundering and terror financing it comes along with.
FATF also urges its member nations to get a better understanding of digital currency and exchanges as it will help their respective governments to conduct better risk assessments and allocate resources according to their requirements. FATF calls for the members to introduce regulations and licensing norms for these digital currency exchanges on par with that of conventional financial institutions.
It has also recommended the digital currency exchanges and businesses to have due diligence processes similar to banks and financial institutions. It can be notices that most of the bitcoin exchange have already incorporated Anti Money Laundering (AML) and Know Your Customer (KYC) regulations in place. However, if the countries end up introducing counterproductive regulations against bitcoin and other cryptocurrencies, it will seriously hamper further development of Bitcoin technology.
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