FATF Holds Second Plenary in Paris, Updates on Worldwide Crypto Adoption

Russia suspended from FATF

In a first for the FATF, it has suspended another member state – the Russian Federation.

The decision was taken by the FATF due to Russia’s failure to comply with a requirement of UN General Assembly Resolution ES-11/1, which called for the removal of its armed forces from Ukraine’s internationally recognized borders.

In light of this breach of the FATF’s core principles, which all members are required to adhere to, Russia will no longer be permitted to participate in FATF meetings or access the organization’s Global Network files.

However, Russia will retain its status as a member of the global network of the Eurasian Group on Combating Money Laundering (EAG) and must continue to meet FATF standards and meet its financial obligations.

Other key commitments outlined

• Indonesia and Qatar will have their mutual evaluation reports released by May 2023.
• Morocco and Cambodia have been removed from the gray list.
• Strategic initiatives were discussed, including beneficial ownership of legal entities and legal arrangements.
• A report on the impact of ransomware attacks on disruptive financial flows will be released in March 2023.
• The report will include a list of risk flags to identify suspicious ransomware-related activities and advise entities on how to better detect them.

Iran

• The Central Bank of Iran (CBI) has announced progress on the implementation of the digital rial at the ninth annual conference on electronic banking and payment systems.
• The governing law of the CBDC will match that of the rial notes, according to Mohammad Reza Mani Yekta, head of the CBI’s Payment Systems Oversight Office.
• Around ten banks have applied to join the project, and it is expected that all banks in the jurisdiction will offer crypto-wallets to citizens for use of the digital rial.

India

• The CBDC pilot program has generated around 800,000 transactions so far, and the jurisdiction aims to scale up the number of customers to 1 million due to the interest of citizens in a digital payment environment.
• RBI is exploring cross-border transactions and linking with legacy systems from other countries, and welcomes private sector and fintech participation in the CBDC project.

France

• The French National Assembly has approved a bill to align local legislation with proposed EU standards for crypto-related activities.
• President Emmanuel Macron has until March 16 to approve or return the bill to the legislature.
• If approved, the new guidelines will apply to new entities registered from July 2023 that offer crypto services.
• Existing entities must follow the regulations of the Financial Markets Authority until MiCA is adopted.

UAE

• Dubai’s Virtual Asset Regulatory Authority (VARA) has introduced its first crypto legislation in February 2023, called the Full Market Product Regulations (FMP).
• The FMP applies to the Emirate of Dubai and all its free zones, excluding the Dubai International Financial Center (DIFC), and is effective immediately.
• All Virtual Asset Service Providers (VASPs) offering virtual asset services in Dubai, before and after publication of the regulations, must register with VARA to ensure full compliance.
• The full market product regulations consist of two parts: Virtual Assets and Related Activities Regulations 2023 and several separate rulebooks.