By Facebook’s digital currency; Libra is again in the news. Ever since Facebook announced the launch of Libra at the developer conference F8 authorities have been scrambling to bring it under regulation. The global watchdog for anti-money laundering, Financial Action Task Force (FATF) in a statement said; if Libra is to operate successfully then Facebook will have to come under the regulations that prevent terrorism financing and money laundering.
Coinbeat believes the FATF is right to an extent. Governments across the world have focused on stopping money laundering to help prevent terrorist activities. There are specific economic cells that track dubious transaction and FATF is always at the top of these activities.
Current Developments around Libra
FATF was under a lot of criticism for failing to find out how Kim Jong Un and North Korea circumvented the US arms embargo and UN sanctions through money laundering and use of Malaysian companies; Glocom and Kay Marines. Since then FATF has been on the highest possible alert level.
FATF’s new chief said; Libra is being closely tracked across all spheres. “We want to make sure that if there are significant risks, they need to be addressed,” Reuters quoted Xiangmin Liu, the president of the Paris-based FATF, as saying.
US and India; the countries who have suffered most from terrorism financing have been over cautious about allowing the use of cryptocurrencies. The governments in both economies have either strictly regulated the use of cryptocurrencies or banned them entirely as legal tenders. Most of the governments globally swung into action after the launch of Libra.
Why is FATF proposing strictest regulations?
FATF chief who took charge on 22nd July Liu said the illegal use of cryptocurrencies is probably spreading at pace. He further referenced to known examples like money laundering, drug trafficking and briefly detailed about other possible criminal uses of the cryptocurrencies.
“The anonymity afforded by virtual assets is being exploited by serious criminals,” Liu said, according to Reuters. He claimed the criminal use of cryptos are only increasing with each day and launderers, traffickers and terrorist financiers are exploiting the anonymity offered with it.
Liu also explained how foolproof technologies to track such illegal transactions are still a work in progress. Lack of such technologies has only made their tasks hardest to pinpoint doubtful transactions.
“We have talked about finding suspicious activity as being like finding a needle in a haystack,” he said. “Well, that haystack is getting bigger and bigger, and is moving all the time.”
How are countries planning to tackle misuse of cryptocurrencies?
FATF convenes regular meetings to help governments globally. In one such meeting organized in June 2019, FATF had advised countries to tighten the noose around cryptocurrencies. They advised governments to bring them under total oversight to prevent any illegal activities.
Earlier on Tuesday, a senior US Treasury official, speaking to reporters in Switzerland, said Libra must meet the highest standards for combating money laundering and terrorist financing if it is to get off the ground.
“Whether it’s bitcoin, Ethereum, Libra, our message is the same to all of these companies: anti-money laundering and combating the financing of terrorism has to be built into your design from the get-go,” Mandelker said.
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