The Financial Action Task Force (FATF), an international enforcer of Anti-Money Laundering (AML) policies in the global financial space, has outlined the dangers that stablecoins provide as regards terrorist financing and money laundering.
According to a document released on October 18, the FATF convened a meeting of representatives from about 205 countries. In the meeting, which was led by FATF President Xiangmin Liu, several issues related to cryptocurrencies were discussed. The FATF reportedly referred to cryptocurrencies as a “major strategic initiative,” while also adding that there could be some significant impacts brought about by the operation and adoption of fiat-backed stablecoins.
However, while the AML enforcer sees certain advantages to the adoption of cryptocurrencies, it singles stablecoins out, claiming that these assets could significantly affect the crypto ecosystem and change the landscape of terrorist financing and money laundering risks.
“There are two concerns: mass-market adoption of virtual assets and person-to-person transfers, without the need for a regulated intermediary. Together these changes could have serious consequences for our ability to detect and prevent money laundering and terrorist financing,” the publication wrote.
In a second document titled “Money laundering risks from ‘stablecoins’ and other emerging assets,” the FATF claimed that it would continue examining the characteristics of stablecoins and assessing their risks, with a possible amendment to its guidance on virtual currencies that will address these assets coming as well.