Digital assets – AML/CFT challenges

As the French financial community pursues its work on digital assets, the ACPR – AMF Fintech Forum has issued a consultation on the anti-money laundering and combating the financing of terrorism (AML/CFT) challenges for this ecosystem. The consultation document, which is presented as a questionnaire, is intended to map out AML/CFT practices, needs and expectations in this growing industry.

AMAFI is stressing the need to introduce AML/CFT measures that are just as stringent as in other areas of activity, but that are also tailored to the specific features of blockchain technology to ensure that they are effective. In particular, the considerable benefits that this technology offers, in terms of its ability to ensure the traceability of all transactions carried out in the distributed ledger, could be usefully harnessed to facilitate AML/CFT supervision and make it more precise (AMAFI / 20-06).

These measures also need to capture the international dimension of the blockchain ecosystem. While AML/CFT is of course an imperative requirement, we cannot overlook the fact that, in these areas especially, participants can turn to service providers outside France. Care must therefore be taken not to unduly handicap the competitiveness of French firms by imposing disproportionate or even non-applicable measures. Not only would such measures do nothing for AML/CFT, they would also undermine the efforts of recent months to make the Paris financial centre attractive to these participants. AMAFI is proposing several avenues of discussion, touching on the need for European dialogue on this issue, the liability of the person or entity that initiates a movement on the blockchain, and the treatment of digital assets that promote participant anonymity.