Tag Archives: Xiangmin Liu

‘Stablecoins’ could hinder efforts to stamp out money laundering – global watchdog

The spread of crypto currencies such as Facebook’s Libra could have serious repercussions for worldwide efforts to detect and stamp out money laundering and terror financing, a global watchdog on illicit finance said on Friday.

“Stable coins” – digital currencies typically backed by traditional money – could spark the mass adoption of crypto currencies and peer-to-peer transfers, cutting out the need for regulated middlemen and hindering efforts to halt criminal use, the Financial Action Task Force (FATF) said.

In comments that underscored global unease about the emergence of Libra, the Paris-based FATF said both stable coins and the companies behind them would be subject to global standards on crypto currencies and traditional financial assets.

“If stablecoins were to become widespread, it could potentially lead to new risks regarding money laundering and terrorist financing,” FATF president Xiangmin Liu told reporters in Paris.

“It is our job to ensure the new risks in connection with stablecoins will be adequately addressed.”

Stablecoins are designed to overcome the wild price swings that have rendered bitcoin and other cryptocurrencies impractical both for commerce and payments and as a store of value.

Facebook unveiled Libra, a stablecoin backed by currencies from the dollar to the euro and government debt, in June, as part of its push into e-commerce and global payments.

It says Libra, which would be the highest profile move to drag cryptocurrencies into mainstream finance and commerce, could boost access to financial services in developing countries and address the high costs and lengthy transfer times common in most global payments systems.

But global regulators and politicians have voiced concerns about, due for launch by June 2020.

The Group of Seven wealthy nations said on Thursday stablecoins such as Libra should not be allowed to launch until the risks they pose are addressed. When launched on a wide scale, stablecoins could threaten the world’s monetary system and financial stability, it said.

FATF, a body launched three decades ago, said it would report on stablecoins to finance ministers and central bankers from the Group of 20 developed countries next year.

Global money-laundering watchdog closely monitoring Facebook’s Libra – official says

The global anti-money laundering watchdog is closely monitoring developments on Facebook’s planned Libra cryptocurrency, its new head told Reuters on Tuesday, in the latest sign of growing regulatory scrutiny of the project.

The Facebook-led Libra project is mooted for launch by June next year. Regulators’ and politicians’ concerns range from the risks that Libra could be used to launder money to privacy and the possibility that it could upset financial stability.

“We want to make sure that if there are significant risks, they need to be addressed,” said Xiangmin Liu, the president of the Paris-based Financial Action Task Force (FATF), which acts as the global standard-setter on anti-money laundering.

Earlier on Tuesday, a senior U.S. Treasury official, speaking to reporters in Switzerland, said that Libra must meet the highest standards for combating money laundering and terrorism financing if it is to get off the ground.

The Libra project has renewed focus on how cryptocurrencies are regulated, with current rules on the sector patchy and varying from country to country.

In the first global attempt to bring the crypto sector to heel, the FATF – a body set up 30 years ago to tackle money laundering – told countries in June to tighten oversight of cryptocurrency exchanges to stop digital coins being used to launder cash and finance terrorism.

Liu, speaking at an event in London, said the illegal use of cryptocurrencies is probably spreading at pace. Known examples, from money laundering to drug trafficking, probably represent only a fraction of the true scale of criminal use, he said.

“The anonymity afforded by virtual assets is being exploited by serious criminals,” Liu said. “These activities are likely to be growing quickly, as law enforcement agencies are only seeing the tip of the iceberg.”

Liu, who took charge of FATF in July, said the volume and speed of cryptocurrency transactions presents a growing challenge in pinpointing illegal use, even as technology to identify such actions is developed.

“We have talked about finding suspicious activity as being like finding a needle in a haystack,” he said. “Well, that haystack is getting bigger and bigger, and is moving all the time.”