Fri. Jul 10th, 2020

Financial Action Task Force believes that Facebook’s Libra virtual currency project will seriously undermine efforts to combat money laundering

2 min read

Facebook’s Libra virtual currency project is currently under severe regulatory pressure, and various regulators are putting pressure on the Libra project. The main reason why regulators are so worried is that the Libra project may use virtual currency for global money laundering and other violations and criminal activities. Because the original intention of the Libra project was to simplify cross-border transfers and cross-border shopping, according to the concept of Facebook, merchants can charge any currency and then exchange it for US dollars. Individuals’ personal or institutional-to-individual transfers will also bypass financial regulation. This type of operation is bound to be used by criminals for money laundering.

Libra cryptocurrency

The Financial Action Task Force (FATF), which was jointly established by many countries and regions around the world, has publicly stated that the Libra project will undermine global anti-money laundering efforts. The organization believes that stable currencies linked to cryptocurrencies may trigger large-scale adoption of virtual currency or peer-to-peer transfers, bypassing the middleman responsible for regulation. These intermediaries, which were originally responsible for the supervision, will review the sponsors and payees to ensure that the transactions between the two parties are legal and that the funds are sourced from formal channels. Without these intermediaries, they are responsible for reviewing transfers that could lead to the globalization of black money, and regulators may not be able to track down the flow of money. Obviously, the same problem exists in Facebook’s Libra virtual currency project, which will seriously hinder the Financial Action Task Force’s efforts to combat money laundering.

The Libra Association, which is responsible for the operation of the Libra project, is jointly established by many well-known technology companies and financial institutions around the world and provides necessary financial support. But as the regulatory pressures on the Libra project are growing, these technology companies and financial institutions are also assessing the risks of continuing to participate in Libra. The number of institutions that decided to withdraw from the Libra project after the trade-off was also increasing. From the initial PayPal to the present, even Visa and MasterCard decided to withdraw from the project.

Via: Reuters