Chainanalysis Says ‘Onerous’ FATF Recommendations Harmful For Crypto Transparency

Not only is it unrealistic, but it is also bad for the entire crypto industry to expect exchanges to send KYC or know-your-customer information to recipient platforms – a process that must be done in every transaction there is. Apparently, this is an idea brought by Chainanalysis as a response to a draft recommendation.

Introducing a Draft Recommendation

The draft recommendation, according to the official report, is courtesy of the Financial Action Task Force or FATF. It is basically an intergovernmental organization with the purpose of going toe to toe against money laundering and other types of financial crimes.

In a draft document officially published back in February, the FATF revealed a handful of measures that national governments must try to apply in order to be more effective in supervising cryptocurrency transactions. Even more so, these measures have the ability to prevent and/or mitigate all risks relating to money laundering.

But as far as Chainanalysis is concerned, these measures can potentially end up in exchanges or even providers of digital asset services. And, as a result, there could be shutting down and decreasing visibility. As such, these activities could end up with potentially illicit activities.

Talking About Virtual Asset Transfers

Apparently, the FATF brought a controversial recommendation in one of its section in the aforementioned document. It mentions about countries having the ability to guarantee all originating VASPs to not only obtain but also hold required and/or accurate originator information. This also includes all required beneficiary information relating to all virtual asset transfers. And apart from submitting directly to beneficiary VASPs, they must also be made available when there is request to appropriate authorities.

The FATF has reportedly made a couple of invitations concerning a public comment on the aforementioned section. It even went to describe the draft requirement as something that can be seen as a mere preventative measure.

Indeed, there are tons of issues when talking about this potential requirement. This is, in fact, a narrative that Jonathan Levin and Jesse Spiro – the Chainalysis COO and global head of policy, respectively – expressed recently. For instance, the “beneficiary” of a certain transaction – something that refers to the recipient of the funds – must not be deemed a crypto exchange. The two executives suggest that virtual assets are specifically designed for the idea of providing a way to move value, a process that can be done without the worry of identifying participants in a certain transaction.