Peru Cracks Down on Cryptocurrency, Mandates Anti-Money Laundering Compliance
In a bid to combat money laundering and terrorist financing associated with cryptocurrencies, Peru’s Presidency has issued a new decree requiring all cryptocurrency exchanges operating within the country to comply with anti-money laundering (AML) regulations.
A Significant Step Forward in Regulation
The decree marks a significant step in Peru’s efforts to regulate the cryptocurrency ecosystem and safeguard its financial system from illicit activities. According to the decree, virtual asset service providers - including individuals and companies operating in Peru - must report information to the Financial Intelligence Unit (UIF-Peru), which is responsible for detecting money laundering and terrorism financing.
Definition of Virtual Asset Service Providers
The definition of “Virtual Asset Service Providers” includes entities engaged in various cryptocurrency-related activities such as:
- Exchanging digital assets for fiat currencies
- Transferring virtual assets
- Providing custody and administration of virtual assets
- Offering financial services related to the sale or offer of virtual assets
Enhancing Transparency and Prevention of Illicit Activities
One of the primary objectives of this decree is to ensure that cryptocurrency exchanges in Peru adhere to the recommendations set forth by the Financial Action Task Force (FATF), which requires exchanges to implement Know Your Customer (KYC) standards. By collecting and sharing customer data, exchanges aim to enhance transparency and prevent illicit activities within the crypto space.
Controversy Surrounds the Decree
However, the new decree has not been without controversy. The Blockchain & DLT Association of Peru (ABPE), a community comprising professionals and enthusiasts advocating for the adoption of bitcoin and blockchain technology, has expressed dissatisfaction with the proposal, claiming it was drafted without their involvement and consultation with the broader Peruvian community.
Call for Dialogue
In response, the ABPE is urging Congress to initiate a dialogue with representatives from the cryptocurrency ecosystem to ensure that all perspectives are considered in the regulatory process.
The Global Trend of Regulation
As the use of cryptocurrencies continues to gain traction worldwide, many countries are grappling with the challenges posed by their decentralized and pseudonymous nature. Peru’s decision to tighten regulations and include cryptocurrency exchanges under AML guidelines reflects the global trend of governments seeking to strike a balance between fostering innovation and safeguarding their financial systems.
The Future of Cryptocurrency in Peru
It remains to be seen how these new regulations will shape the cryptocurrency landscape in Peru and how industry stakeholders will respond to the government’s call for increased compliance. For now, the decree represents a significant step forward in Peru’s efforts to combat financial crimes and protect its economy from the potential risks associated with cryptocurrencies.