Financial Crime World

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Harmonized Approach Needed for Virtual Asset Service Providers

The fight against money laundering (ML) and terrorist financing (TF) requires a harmonized approach for virtual asset service providers (VASPs), experts say.

According to a recent report, VASPs often rely on external sources when performing customer due diligence (CDD) to ascertain the payment, customer profile, and business activity. However, smaller and less regulated PSPs that offer complex services pose a higher risk of ML/TF.

Regulatory Guidelines and Frameworks

To address these concerns, regulatory guidelines and frameworks must be established for the common treatment of ML/TF risks connected to VASPs. This includes developing:

  • A dedicated sector risk assessment
  • Guidelines for non-profit organizations (NPOs) exposed to TF

Confiscation of Proceeds of Crime

Confiscation of proceeds of crime from ML/TF should be pursued more decisively by law enforcement agencies (LEAs). Consistent practice and expertise must be developed to enhance asset tracing, and authorities must ensure:

  • The gathering and maintenance of relevant statistics on seized, confiscated, and returned assets

Polish AML/CFT System

The Polish AML/CFT system was found to be fully compliant with two FATF Recommendations, largely compliant with 21, and partially compliant with 17 out of 40 recommendations. The follow-up process will require:

  • Submission of a progress report describing new measures taken since the publication of the mutual evaluation report

Possible Consequences

If Poland fails to address identified deficiencies, it may be put under MONEYVAL’s enhanced follow-up reporting process, which could lead to:

  • Official disciplining letters
  • High-level visits from European officials As a last resort, MONEYVAL may issue a statement declaring Poland’s insufficient compliance with AML standards and advising all AML/CFT network members to address the risk posed by a non-compliant state.

Conclusion

By taking timely actions in areas that require improvement, Poland can avoid being designated as a non-compliant jurisdiction. The development of a harmonized approach for VASPs is crucial in preventing ML/TF and ensuring the integrity of the financial system.