Global anti-money laundering watchdog, the Financial Action Task Force, has called for greater adoption of Virtual Asset Service Provider Travel Rule to curb the flow of illicit funds using cryptocurrencies.

In its latest report, the FATF laid out a roadmap that calls for improved virtual asset regulation in FATF member-states and FSRBs that will allow them to apply the Travel Rule and other anti-money laundering recommendations to crypto.

According to the report, delegates attending the recent FATF Plenary in Paris, France, agreed on a plan to promote the enforcement of standards on the “transmission of originator and beneficiary information,” according to its modified Travel Rule. The FATF amended the Travel Rule in 2019 to compel Virtual Asset Service Providers to collect and share data about the source and destination of digital asset transfers of over $1,000.

The United States, whose threshold is $3,000, needed minimal changes to accommodate the FATF’s 2019 Travel Rule amendments since most requirements were already codified in the nation’s Bank Secrecy Act.

However, Sens. Elizabeth Warren and Roger Marshall recently drafted a bill to cast a wider net around the crypto industry. The proposed regulation suggests re-classifying certain crypto firms as money services businesses. This designation, amongst other things, will bring them under the Bank Secrecy Act’s umbrella and subject them to more record-keeping.

At the plenary, the FATF suspended the Russian Federation’s membership as the country’s war against Ukraine entered its second year. The FATF said that Russia’s actions have threatened global financial stability and violated the spirit of cooperation between FATF members in eliminating illegal fund flows.

The FATF has also placed Jordan on its so-called grey list for digital asset risk assessment deficiencies, amongst other things.

As the world’s money laundering authority, the FATF relies on autonomous, interdependent regional bodies (FSRBs) to turn recommendations into regulations. These bodies cover the Asia-Pacific, Caribbean, Eurasia, the Middle East, Latin America, and Africa.

Last year, cryptocurrency-related ransomware schemes decreased from $765.6 million in 2021 to $456.8 million in 2022.

While the decline is promising, Chainalysis argues that these numbers may not necessarily reflect a decrease in incidents. There could still be crypto addresses that analytics tools have not flagged as suspicious, it notes. 

Furthermore, the firm attributes the decline to victims refusing to comply with attackers’ demands as cyber insurance firms tighten rules. The Office of Foreign Assets Control also prohibits transacting with sanctioned entities. Ransomware revenues went mostly to centralized exchanges in 2022, whose adoption FATF’s 2019 rule could further shrink illicit fund flows.

Crypto firms complying with the new FATF guidelines must develop secure ways of sharing counterparty information while ensuring privacy.

Last year, the U.S. Treasury Department sanctioned Ethereum mixer TornadoCash after it was used to obfuscate the movement of $96 million from the Horizon Bridge attack.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

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