FCC RegUpdate

On November 6, 2023, the National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organizations Committee (NAMLCFTC) released guidance on combating the use of unlicensed virtual asset service providers. The guidance provides detailed information on how firms can identify and address governance challenges and emerging risks.

To know more, click here https://www.fcctimes.com/2023/11/06/unified-approach-joint-guidance-on-managing-unlicensed-virtual-asset-service-providers-in-the-uae-in-accordance-with-international-standards/

The guidance directs entities to be vigilant for fraud by unlicensed VASPs, manage risks associated with money laundering and terrorism financing, address emerging threats through assessments, and perform due diligence to detect fake documents and sanctions evasion.

It aligns with the Financial Action Task Force (FATF) publication on updated guidance for a risk-based approach to virtual assets and virtual asset service providers.

Key red flags include:

  • Lack of a regulatory license and disclosure for VASPs, such as risk warnings or terms and conditions.
  • The purchase or sale of real estate using virtual assets.
  • Poorly maintained websites and communications.
  • Conducting fraudulent ICOs that fail to deliver projects, resulting in the theft of investors’ funds.
  • Using fake cryptocurrency wallets and exchanges.