The Presidency of Peru has adopted a new order to address rising worries about money laundering and terrorist funding related to cryptocurrency.
All crypto exchanges inside the nation are required by decree to adhere to anti-money laundering (AML) standards. To protect its financial system from illegal activity, the Peruvian government has taken this important step towards regulating the crypto ecosystem.
The decree mandates that all virtual asset service providers in Peru, whether they are sole proprietors or large corporations, must henceforth register with the UIF-Peru. The UIF-Peru collects, processes, and shares data to identify and prevent terrorist funding and money laundering.
Included in the definition of “Virtual Asset Service Providers” are businesses that facilitate the buying and selling of cryptocurrencies in exchange for fiat or legal tender, the conversion of one virtual asset to another, the transfer of virtual assets, the safekeeping and management of virtual assets, and financial services relating to the sale or offer of virtual assets.
The Financial Action Task Force (FATF) guidelines are one of the mainstays of this order, and their implementation in Peru’s crypto exchanges is a top priority. Particular emphasis is placed on the “travel rule” of the FATF, which mandates that exchanges have to Know Your Customer (KYC) policies. Exchanges gather and share user data to increase crypto industry transparency and combat illegal activity.
While the order is currently in place, more detailed instructions for the prevention of money laundering and terrorist funding at cryptocurrency exchanges in Peru are scheduled to be released in the coming days by the Financial Intelligence Unit. It is expected that these regulations would help virtual asset service providers in the Andean nation better understand their legal duties.
The government’s latest regulation to mitigate the threats posed by virtual currencies has not been without criticism. The Blockchain & DLT Association of Peru (ABPE), a group of experts and enthusiasts working to promote the use of blockchain technology, is unhappy with the current state of affairs. They say they weren’t consulted or included in the writing of the idea, which would have benefited the Peruvian people as a whole.
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