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Qatar needs to ramp up efforts to combat money laundering: FATF

Qatar needs to ramp up efforts to combat money laundering: FATF

Qatar has come under fire from the Financial Action Task Force (FATF) over loopholes in the supervision of its digital currency industry.

The FATF pointed out in its latest evaluation of anti-money laundering procedures in Qatar that local regulators must increase monitoring of digital asset use. While the country has made impressive progress, the FATF points out that regulatory shortcomings make it susceptible to bad actors.

Despite a low domestic crime rate, loopholes in anti-money laundering (AML) rules expose Qatar to terrorism financing, smuggling, fraud, and drug running risks which could lead to a demotion to the FATF’s grey list. The report shows a majority of the risk arises from the borderless nature of the digital currency, with the FATF alleging that regulators are handling AML violations leniently.

“There are major inconsistencies between Qatar’s risk profile and the type and extent of terrorist financing activity prosecuted and convicted,” read the report. “No formal sanctions have been applied on a natural or legal person for contravening the prohibition.”

Only a handful of digital currency exchanges operating in Qatar have complied with the FATF’s travel rule requiring them to transmit information of parties of a virtual currency transaction to the authorities. Despite the negative streak relating to digital assets, the FATF praised Qatar’s efforts in confiscating sums identified as the proceeds of crime.

“Qatar has a robust framework to implement targeted financial sanctions related to terrorist financing and used this to seize a large number of assets, but the country needs to focus more on its implementation of proliferation financing sanctions,” read the report.

In its defense, the Qatar Central Bank (QCB) said via a post on its website that the FATF’s positive comments as evidence to “demonstrate the country’s commitment to combating illicit financing.”

Scrambling to align with the FATF

Regulators worldwide are scrambling to improve their anti-money laundering rules to be in sync with the provisions of the FATF. Japan is the latest country to announce the launch of stricter AML rules for the digital currency ecosystem through ratification of the FATF’s travel rule.

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