Financial Action Task Force Issues Bitcoin Guidelines, Warns about Money …

The independent intergovernmental organization FATF or The Financial Action Task Force (on Money Laundering), headquartered in Paris, has published a report as a guide for using digital currencies titled “Guidance for a Risk-Based Approach to Virtual Currencies.” It includes benefits of digital currencies as well as potential risks of money laundering and terror financing.

The report is essentially the conclusion to the recent meeting held at Brisbane that was participated by 34 member nations and two regional organizations – the European Union and the Gulf Co-operation Council — to discuss policies, regulations and compliance for digital currencies.

The 48-page extended report issued by the FATF described bitcoin payment services and products as potential tools for money laundering, and announced that digital currency service providers and companies must identify and notice potential risks of using the currency.

FATF heavily emphasized the importance of its member nations to understand the technicalities and the technology behind digital currencies such as bitcoin, and encouraged its nations to introduce regulations and restrictions for digital currency exchanges that are similar to that of traditional financial establishments, thus requesting all digital exchanges to register and subject to the same regulations of other financial institutions and money transfer businesses.

The FATF’s “guidelines” of bitcoin are predicted to have the same effect as BitLicense had on New York-based bitcoin startups – this time on a global scale.

Despite the report’s persistent connection of bitcoin to money laundering and terrorist financing cases, the report does point out positive usages and applications of the technology behind digital currencies. The FATF respects the attention of venture capital firms and billionaire angel investors who have invested hundreds of millions of dollars in digital currency startups.

“Virtual currency has the potential to improve payment efficiency and reduce transaction costs for payments and fund transfers,” the report said. “For example, Bitcoin

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