FATF: crypto-currency anti-fraud report

Virtual assets use innovative technology to transfer value quickly around the world and have many potential benefits including faster and cheaper payments. But the anonymity associated with them also attracts criminals, who have used virtual assets to launder the proceeds of a range of offenses such as drug trafficking, arms smuggling, fraud, tax evasion. , cyber attacks, sanction fraud, child exploitation and human trafficking.

In response, the FATF Report on Virtual Assets - Red Flag Indicators of Money Laundering and Terrorist Financing will help national authorities to detect whether virtual assets are being used for criminal purposes. Based on more than 100 case studies collected by members of the FATF global network, it highlights the most important warning indicators that could suggest criminal behavior. The key indicators in this report relate to:

> Technological features that increase anonymity - such as the use of peer-to-peer exchange websites, mixing or tumbling services, or cryptocurrencies enhanced by anonymity

> Geographic risks - criminals can exploit countries with weak or no national measures for virtual assets

> Transaction patterns - which are irregular, unusual or rare, which may suggest criminal activity
Transaction size - if the amount and frequency does not have a logical business explanation

> Sender or recipient profiles - unusual behavior may suggest criminal activity

> Source of funds or wealth - which may be linked to criminal activity

This report will help virtual asset service providers, financial institutions and designated non-financial businesses and professions, as well as other reporting entities, to detect and report suspicious transactions. It will also provide useful information for financial intelligence services, law enforcement agencies, prosecutors and regulators to analyze suspicious transaction reports or monitor compliance with anti-money laundering and terrorist financing controls.

This report complements the FATF Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (June 2019) which explains how to understand money laundering and terrorist financing risks of virtual assets, how to authorize and register the sector, equity sectors need to know their client information, how to store this information securely and how to detect and report suspicious transactions.

Download the report

Virginie Gastine Menou

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