The IOTA Foundation has expressed its strong support for the recent revision of the Financial Action Task Force (FATF) standards concerning Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). This updated approach aims to balance risk management without hindering financial inclusion, a crucial step for fostering a more inclusive financial ecosystem.
IOTA highlights that FATF’s proposed shift from “commensurate” to “proportionate” in risk management discussions represents a significant improvement in regulatory clarity. While this change might seem subtle, it is a key step toward ensuring that regulations are more effectively tailored to the risk profile of financial institutions, making compliance simpler and more efficient.
Another critical aspect of the FATF proposal that IOTA supports is the push for a “supervisory review of risk mitigation measures.” This encourages financial institutions to integrate robust risk management strategies while maintaining a level of flexibility that suits various business models, especially those in lower-risk sectors. By simplifying compliance, the revision lowers barriers for startups, promoting innovation and competition within the financial industry.
IOTA also welcomes the FATF’s acknowledgment of digital identity solutions in non-face-to-face interactions. Given the rapid advancements in digital identity technologies, IOTA argues that such transactions should no longer be classified as high risk. This update supports greater accessibility to financial services, ensuring that rigorous AML/CFT standards are upheld without stifling technological progress.
Additionally, IOTA proposes that FATF explore industry-specific solutions that balance user privacy with compliance requirements. The IOTA Foundation has pioneered a tokenized Know Your Customer (KYC) solution within the European Blockchain Regulatory Sandbox, providing a scalable, secure, and privacy-preserving method for DeFi transactions. This innovative approach safeguards user data while ensuring regulatory compliance.
Also Read: EU Champions IOTA for Web3 ID, Digital Passports & MiCA Compliance in Blockchain Innovation
IOTA has invited FATF and industry stakeholders to engage in further discussions to refine these policies, reinforcing its commitment to shaping a fair and inclusive financial ecosystem.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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