Cryptocurrency is an industry that thrives on the way that customers can protect their identities, even if the transactions are on full display. However, the Financial Action Task Force recently released new standards on Friday that come with a highly controversial caveat.

According to this new change, the task for is recommending that “virtual asset providers” (VASPs) release information about their customers between platforms, whenever funds transfers occur between them.

VASPs include cryptocurrency exchanges, among others. However, the FATF explained that, in the event that a VASP is a person, rather than an exchange or other firm, then:

“it should be required to be licensed or registered in the jurisdiction where its place of business is located – the determination of which may include several factors for consideration by countries.”

This recommendation coincides with the contentious part of a proposal that the FATF made in February, advising that the countries should keep a record of sender and recipient information.

Specifically, this recommendation stated that each country, whenever a business sends money, should:

“obtain and hold required and accurate originator [sender] information and required beneficiary [recipient] information and submit the information to beneficiary institutions … if any. Further, countries should ensure that beneficiary institutions … obtain and hold required (not necessarily accurate) originator information and required and accurate beneficiary information.”

With the new guidance, the FATF states that each transfer has to include information regarding the name of the sender, the account number used, the recipient’s name, and the account number of the recipient. Furthermore, the sender has to include their physical address, or:

“national identity number, or customer identification number (i.e., not a transaction number) that uniquely identifies the originator to the ordering institution, or date and place of birth.”

The FATF believes that the biggest threat against virtual assets is the potential for it to be used in criminal and terrorist activities, but they have decided to give 12 months for platforms to integrate the new rule.

The travel rule that has long required international banks to provide this information for customers, but many proponents of the blockchain industry have been upset by this change. As they see it, imposing this rule would be impossible for cryptocurrency, and would pose a threat to use privacy. These proponents also allege that the rule is counter-productive to the efforts made by law enforcement.

Even with these recommendations, FATF is putting them in the hands of the country’s jurisdictions, in that they have the option to impose a rule that VASPs in their area register with the authorities. Those authorities would then be in charge of stopping criminals from

“holding, or being the beneficial owner of, a significant or controlling interest, or holding a management function in, a VASP.”

The authorities would need to impose rules to require the VASPs to get approval them from for any changes in their operation, shareholders, and more.

FATF recommends that the countries offer open-source information and web-scraping tools to enforce these rules, allowing them to find any operations that are unlicensed or unregistered.

Furthermore, the authorities should gather their intelligence with the use of public feedback and details offered by reporting institutions, says the FATF. Furthermore, VASPs should be able to stop transactions with sanctioned parties.

Chainalysis, a data analytics company has warned that the rule would end up forcing many companies to cease operations, rather than creating more transparency in the industry. However, even with this advisement, the FATF did not withdraw their pursuit. U.S. Treasury Secretary Steven Mnuchin stated:

“We will not allow cryptocurrency to become the equivalent of secret numbered accounts [and] we will allow for proper use, but we will not tolerate the continued use for illicit activities.”

While the recommendations by the FATF are not actually required, any member country that opts out will end up being put on a blacklist to prevent foreign investments.

The views and opinions expressed in the article Financial Action Task Force Will Now Require Crypto Exchanges to Share Customer Data, Aiming to Fight Against Money Laundering do not reflect that of 48coins, nor of its originally published source. Article does not constitute financial advice. Kindly proceed with caution and always do your own research.

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