G7 seeks anti-money laundering rules for peer-to-peer crypto deals


- Advertisement -

The Group of Seven countries will urge an international finance watchdog to consider tightening oversight of cryptocurrency transactions between individuals, in a bid to close loopholes for money laundering and sanctions evasion, Nikkei has learned.

In their three-day meeting in Japan beginning Thursday, G7 finance ministers and central bankers will call for the Financial Action Task Force (FATF) to explore the issue and consider possible countermeasures.

FATF, an intergovernmental body that sets regulatory standards to curb money laundering and terrorist financing, currently recommends only monitoring transactions that go through crypto service providers.

It would fall on FATF to draw up the specifics of any potential response. It could require stricter customer due diligence by exchange operators to curb illicit transactions, or partner with regulators and private-sector analysis companies to get a detailed picture of suspicious transactions.

The G7’s concerns come as financial authorities sound alarm bells about the rapid spread of virtual currencies — including in emerging countries — and warn that an effective regulatory regime is imperative.

Handled without the involvement of service providers, peer-to-peer cryptocurrency transactions are reportedly used in drug trafficking and money laundering. The amount of cryptocurrency sent by wallets considered illicit jumped 68% last year to $23.8 billion, according to U.S.-based research firm Chainalysis.

While G-7 members see effective controls as a must, regulators and companies could face an uphill battle in implementing them. Peer-to-peer transactions are numerous, and monitoring them is a challenge from a privacy perspective. But G-7 members see effective regulation as a must.

Previous FATF recommendations had centered on a rule requiring that crypto companies log the personal information of senders and recipients.

Japan updated its cryptocurrency rules accordingly in 2022. Transactions involving “unhosted” wallets — those held by individuals and not associated with a specific company — had previously fallen outside its regulations.

Meanwhile, some private sector players are taking action on their own.

“We’ve implemented blockchain monitoring tools and blocked suspicious transactions,” said Noriyuki Hirosue, CEO of Japanese exchange Bitbank.

“It’ll probably become essential eventually as a money laundering countermeasure,” Hirosue said.

- Advertisement -


Please enter your comment!
Please enter your name here

Share post:




More like this

Nigeria’s new President Tinubu promises economic reboot

Nigeria's new President Bola Tinubu vowed at his swearing-in...

South African rand flat but market nervous after last week’s record low

The South African rand was broadly flat in early...

Dollar nudges lower as US debt ceiling deal dents safe-haven appeal

The dollar nudged lower on Monday, pulling back from...

Saudi diesel imports from Russia, exports to Singapore hit records

Leading crude exporter Saudi Arabia is maximising refining profits...