The Financial Services Commission Financial Intelligence Unit (FIU) said on the 22nd that it attended the 34th, 6th plenary meeting of the Financial Action Task Force (FATF), held at the headquarters of the Organisation for Economic Co-operation and Development (OECD) in Paris, France, from the 15th to the 19th.
At this plenary, more than 200 member countries of the global network and observers from international organizations attended to discuss responses to global illicit finance threats such as money laundering, terrorist financing, and proliferation financing. Member countries agreed on a range of international cooperation measures to respond to new risk factors that threaten financial soundness and security.
The FATF decided to publish the seventh updated report reviewing the status of anti-money-laundering (AML) compliance for virtual assets (VA) and virtual asset service providers (VASP). According to the report, the overall level of implementation of FATF Recommendation 15, including each country's enforcement of the travel rule and supervision, was generally low, and in particular, some countries with large volumes of virtual asset transactions showed limited implementation of the substantive standards.
The FATF also approved a new report analyzing money laundering, terrorist financing, and proliferation financing risks in decentralized finance (DeFi). Member countries expressed concern that virtual assets continue to be exploited in large-scale financial fraud and crime, and that cases of such crimes combining with the risk of weapons of mass destruction proliferation financing are increasing. They also noted that artificial intelligence (AI) is emerging as a new risk factor that is advancing criminal methods.
FIU Director Lee Hyung-joo welcomed the adoption of the DeFi-related report and the report on emerging risks in the virtual asset ecosystem, but noted that regulatory arbitrage is occurring because licensing and registration requirements for virtual asset service providers, supervisory frameworks, and approaches to offshore operators differ by country. Lee emphasized the need to swiftly establish a consistent and effective global regulatory framework.
Many member countries, including Korea, argued that, as money laundering risks using cross-border virtual asset transactions are expanding, the scope of the travel rule should be extended to both sending and receiving service providers and applied to small transactions as well. They also proposed that, as cases of criminal organizations exploiting offshore and unregistered virtual asset service providers are increasing, measures to restrict transactions with high-risk unregistered operators should be reviewed along with stronger customer due diligence obligations. In addition, they reaffirmed the need for continued monitoring and international cooperation on emerging risks such as stablecoins and DeFi.
Director Lee Hyung-joo said, "We will actively share Korea's policy and practical experience accumulated in the process of responding to fraud and money laundering crimes linked to organized scam compounds in Southeast Asia to help strengthen FATF-level capabilities to respond to fraud crimes."