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New FATF guidance released on virtual assets and virtual asset service providers

November 26, 2021

The Financial Action Task Force (FATF), the global anti-money laundering watchdog, released updated guidance in October 2021 to help the private sector and jurisdictions apply the FATF’s risk-based approach to virtual asset (VA) activities and virtual asset service providers (VASPs).  The FATF initially released its virtual asset guidance in 2019 attempting to bring VAs and VASPs in line with traditional financial institutions. The FATF has continued to review and update this guidance based on feedback from the industry. Importantly, the FATF acknowledges function over form and explains that VA activities should be analyzed based on the services provided rather than whether they fit into the specific wording of the definitions.  The guidance notes “countries should not apply their definition based on the nomenclature or terminology which the entity adopts to describe itself or the technology it employs for its activities. . . . The obligations in the FATF Standards stem from the underlying financial services offered without regard to an entity's operational model, technological tools, ledger design or any other operating feature.”  

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