Financial Action Task Force (FATF)

Botswana Cryptocurrency Regulation: Government Set to Present Virtual Asset Bill to Parliament

22/01/2022 by Idelto Editor

The Botswana government is set to present a “Virtual Asset Bill” to the country’s parliament, a move that could see it become one of the first countries in Africa to have laws regulating cryptocurrencies.

Preventing the Proliferation of Risks Associated With Cryptos

A Botswana government draft document that proposes to regulate new and developing virtual assets businesses, as well as to provide a regulatory body with its functions and powers, is now set to be presented before the country’s lawmakers, a recent government gazette has shown.

The planned presentation of the Virtual Asset Bill alongside other bills such as the Financial Intelligence Bill comes just over two months after the country’s central bank warned residents engaged in cryptocurrency trading that Botswana does not have a regulatory framework to govern such trading.

Yet, in the draft that was published in the Extraordinary Government Gazette on December 23, Botswana authorities suggest they are not only seeking to recognize crypto trade but plan to include “provisions for managing, mitigating and preventing money laundering and financing of terrorism” into the proposed law. The draft also seeks to prevent the proliferation risks that are associated with virtual assets and new emerging business practices and technologies.

Concerning companies or entities that issue tokens, the draft bill states:

Part III further provides that the Regulatory Authority may grant a licence if the applicant demonstrates that it has the necessary infrastructure and resources to carry out the business activities of a virtual asset service provider or issuer of initial token offerings and that the applicant is a fit and proper person. The definition of “fit and proper” is provided for in clause 11 (2) consistently with the provisions of the Financial Intelligence Act.

Elsewhere, the draft explains the instances where the regulator can grant an operating license to applicants. For their part, license holders are expected to protect assets belonging to clients. They are also expected to “prevent market abuse and provide measures for the acquisition of a beneficial interest in their businesses.”

White Paper Issuance Mandatory

With respect to the advertisement of token offerings, the draft states:

“Part IV further provides that a licence holder shall issue a white paper that contains full and accurate information for potential purchasers of virtual assets and initial token offerings to make informed decisions.”

Meanwhile, some crypto enthusiasts have speculated that Botswana’s proposal to amend its financial laws could be linked to the country’s removal from the Financial Action Task Force’s (FATF) graylisted countries in October 2021. The FATF had previously cited deficiencies in the country’s anti-money laundering (AML) and counter-terrorist financing (CTF) regimes as reasons for flagging the country.

However, in late 2021 — nearly three years after grey-listing — the FATF said it had removed Botswana from the list after noting some improvement.

What are your thoughts on this story? You can share your views in the comments section below.

Seychelles Examines the Pros and Cons of Licensing Crypto Trading Platforms

10/09/2021 by Idelto Editor

Seychelles’ Financial Services Authority (FSA) together with the country’s finance ministry, is reportedly working on a policy to either prohibit or license crypto trading platforms as registered international businesses.

Increase in International Investigations of Crypto Platforms

According to a report, the move by the FSA happens against the backdrop of a rising number of international investigations into scam crypto trading platforms that have been traced to the island nation. As recently reported by Bitcoin.com News, the Onecoin bitcoin scam became the latest foreign crypto entity to be a target of such an investigation. This after a request for a probe was submitted to the country’s law enforcement.

Meanwhile, in the same report, Randolf Samson, who heads the FSA’s anti-money laundering and terrorist financing section, is quoted explaining the rationale behind the regulator’s move. Samson detailed:

There are many incorporated companies that are facilitating that activity. The reason why they are using Seychelles is because we do not have a framework that would otherwise discourage them. Cryptocurrency developed quite fast but the laws of many countries are not up to date with this type of activity.

Nevertheless, Samson insists that “a risk assessment needs to be carried out to look at the pros and cons” before any final decision is made. Therefore, if the outcome of the so-called risk assessment points to potential benefits for Seychelles, then such trading companies will be licensed, explained Samson.

On the other hand, if the incorporation or licensing of cryptocurrency trading platforms “brings too much risks and bad reputations, we will simply prohibit the activity.”

Crypto’s Growing Popularity

Still, Samson concedes that a decision that results in the prohibition of crypto trading in Seychelles could prove to be an unpopular one. Samson said:

“The problem with cryptocurrency, the way things are going, you will have to take a stance as it is popular among a growing number of people and other countries are taking options to regulate this activity.”

However, if the policy to license crypto trading businesses is adopted, Seychelles will be forced to take on the responsibility of ensuring that individuals and companies are not involved in illicit activities. In any case, such a policy “will also put Seychelles in line with recent Financial Action Task Force (FATF) amendments made in June 2020,” the report concludes.

Should Seychelles license crypto trading platforms that are not based on the island? Tell us what you think in the comments section below.

Bitmex Fast-Tracks KYC Program as Regulators Tighten Screws on Anti-Money Laundering Rules

22/10/2020 by Idelto Editor

Bitmex said Wednesday that it is fast-tracking its user verification program in order to comply with regulatory requirements. Users must now be fully verified by Nov. 5, 2020 “to continue trading on the platform,” it said.

In a statement, the crypto derivatives exchange stated that “unverified users will not be able to open new positions” after this date. They will also “not be able to withdraw funds from their Bitmex account without completing verification” beginning Dec. 4.

The accelerated verification means Bitmex’s mandatory know-your-customer (KYC) process – first announced Aug. 28, 2020 – will now close three months earlier than originally scheduled. Initially, it was slated to end February 2021.

Bitmex may have been pressured into action by the charges it faces in the U.S. The exchange was recently charged by the U.S. Commodity Futures Trading Commission (CFTC) for operating illegally and for “failing to implement required anti-money laundering procedures.”

At the same time, the Department of Justice (DoJ) indicted former chief executive officer Arthur Hayes and his leadership team for “violating the Bank Secrecy Act and conspiring to violate the Bank Secrecy Act.”

“Recent events have underscored the requirement for market operators to implement robust and compliant KYC programme,” Bitmex said.

As part of the exchange’s KYC procedures, individual users are prompted to upload a photo ID and proof of address, take a selfie, and answer several questions that relate to the source of their funds and their trading experience. Bitmex says this takes approximately five minutes to complete, and more than 50% of its users have since completed the process.

By Nov. 5, Bitmex customers will need to have completed verification in order to open a new position or to increase an existing position. Existing open positions can be maintained or reduced by unverified users, although pending orders that would increase a position will be cancelled, it said.

After Dec. 4, “if there are remaining open positions on unverified accounts, we will review these…and communicate directly to users holding these to facilitate an orderly closing of these positions.”

Crypto exchanges are under pressure to implement stringent KYC procedures, as regulators around the world seek to align with anti-money laundering recommendations from the Financial Action Task Force (FATF).

What do you think about Bitmex’s accelerated KYC processes? Let us know in the comments section below.

The post Bitmex Fast-Tracks KYC Program as Regulators Tighten Screws on Anti-Money Laundering Rules appeared first on Bitcoin News.

Gibraltar Updates Distributed Ledger Framework to Align With FATF Crypto Regulations

19/09/2020 by Idelto Editor

The Gibraltar Financial Services Commission (GFSC) has updated its guidance notes for distributed ledger technology (DLT) providers to include recommendations for risk management, as well as clarify aspects around the issuance of digital assets.

In a statement released on September 17, the regulator said the new updates are part of an ongoing effort to adapt its regulatory framework to include the latest Financial Action Task Force (FATF) recommendations for virtual asset service providers.

Gibraltar, which has been criticized by the European Union for not doing enough to curb money laundering in the past, particularly in its DLT rules, describes the update as a “natural evolution of the defined regulatory principles.”

According to the GRSC, the guidance notes update the risk framework to “distinguish between virtual assets and virtual asset denominated instruments that are generally classified as higher risk and require additional factors or onboarding tests to be considered.”

Amendments to new token issuances prevent DLT providers from utilizing internally generated token reserves as part of its regulatory capital requirements. In total, the regulator has updated seven out of the nine guiding principles supporting the existing framework, launched in 2018.

Gibraltar’s Minister for Digital and Financial Services, Albert Isola, commented:

Prospective licensees must demonstrate a clear appreciation of the nine core principles underpinning the regulatory framework, covering areas such as corporate governance, capital adequacy, risk management, customer care, and in due course, market manipulation. Other essential prerequisites include thorough internal risk management strategies, robust corporate governance structures, and well-defined protocols, with secure checks in place to ensure the protection of clients’ assets is prioritised.

Currently, 13 DLT providers are licensed under the Gibraltar Financial Services Commission, including international platforms Etoro, Huobi, Xapo, and Bitso.

What do you think about Gibraltar’s updated DLT framework? Let us know in the comments section below.

The post Gibraltar Updates Distributed Ledger Framework to Align With FATF Crypto Regulations appeared first on Bitcoin News.