International anti-money laundering policymaker Financial Action Task Force (FATF) has published a report last week indicating that UK crypto exchanges pose a “low risk” for terrorist financing and money laundering activities.
According to the report, there is insufficient evidence to suggest that such activities occur through cryptocurrency exchanges.
However, the watchdog asked the UK officials to work on a plan to extend counter-terrorist financing and anti-money laundering rules into the crypto industry to tackle any potential risks.
The FATF tells the UK to “continue to develop an understanding of emerging risks (such as virtual currencies) and intelligence gaps, and take appropriate action.”
Based on the report, the UK acknowledged the “inherent vulnerabilities” linked to the anonymity of cryptocurrencies.
As a result, the country intends to regulate crypto exchanges under the EU’s fifth Anti-Money Laundering Directive implementation and watch exchange services between fiat and digital currencies, including wallet providers.
The document arrives in the build-up period before the FATF releases the international crypto regulation guidance, expected by June next year. The guidance will set out how countries must govern companies offering ICOs, crypto exchanges, and digital wallet providers.
The initiative is in response to the G20 leaders who asked for a global coordination on the problem and reiterated their pledge to regulate crypto-assets last week.
“We will regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF standards and we will consider other responses as needed,” they said.
Earlier this year, the US Treasury’s Office of Terrorism and Financial Intelligence has called on the global community for stronger crypto regulations.