G7: Crypto Exchanges Must Apply FATF Standards
Group of seven (G7), which includes countries such as Germany, Canada, USA, France, Italy, Japan and the UK. These countries are the world’s leading economies. The G7 Group seeks to create a legal and regulatory framework for the use of Bitcoin (BTC) and cryptocurrencies in accordance with the legal norms of these states. And meeting the requirements of the International Financial Action Task Force on Anti-Money Laundering (FATF).
The Financial Action Task Force on Money Laundering (FATF) was established in July 1989 in Paris at the initiative of the G7, the leading industrial powers and the President of the Commission of the European Communities (CES) within the Organization for Economic Cooperation and Development (OECD). The main goal of the FATF is to promote cooperation between different states in the field of combating illegal financial transactions and, above all, with the laundering of proceeds from illegal means, as well as with the financing of terrorism.
The purpose of creating a regulatory and legal framework is also to minimize cyber attacks using ransomware. The organization stressed that Virtual Asset Service Providers (VASPs) such as exchanges, custody services and cryptocurrency management should implement guidelines to limit such crimes, money laundering and terrorist financing.
The G7 emphasized the importance of virtual asset service providers to develop effective measures that meet FATF standards and national commitments. In a statement released on Tuesday, the G-7 countries highlighted in particular those requiring exchanges to provide information about the people and beneficiaries of virtual asset transfers. The group’s goal is also to standardize the so-called rules (travel) in the cryptocurrency ecosystem, that is, the rules (travel) that apply in the traditional financial system as well.
In other words, the exchange must know who participated in the transaction, be able to determine whether they are suspicious, and in case of violation, report this to the appropriate authorities. According to the requirements, the exchange should also be able to track the availability of information, block transactions and prohibit transactions in the event of violations by individuals or legal entities.
The organization is concerned about the rise in the number of ransomware programs in recent years. But the main reason for concern is that criminals have begun to use cryptocurrencies to pay for their criminal activities.
The document added: This is particularly important for the G7 and expands the need for all countries to apply FATF standards to virtual assets and virtual asset service providers. The G7 emphasized that cryptocurrency-related service providers must comply with the FATF guidelines. A wake-up call isn’t just for countries and exchanges. The G7 also urged companies to reduce risks and improve their security systems. In this regard, he stressed that it is necessary to go further in terms of traditional border security.
The explanatory note also warned that the company that facilitated the ransom payment to the offender would be sanctioned. On the latter point, CriptoNoticias recently announced that such payments would be punishable by law in the United States. The Treasury Department has warned that companies that pay to publish information could be fined because they encourage future attacks.
According to a report by insurance company Coalition, 40% of cyber insurance claims were related to ransomware attacks, and this crime increased by 47% in the second quarter of 2020.
Ransomware attacks are used by hackers to control computer hardware remotely. After gaining control over the equipment, the ransomware blocks access to the functionality of the equipment and encrypts the information found. Then they put forward a ransom demand (usually paid in cryptocurrency) for accessing equipment or decrypting information. In theory, unlocking and decryption can only be done with the tools used by hackers.
The desire for freedom moves us forward. But the harsh reality takes control of everything.