FATF Report: Virtual Currencies - Key Definitions and Potential AML/CFT Risks (June 2014)

Summary

This is the FATF's 2014 typologies report on virtual currencies, made available by the BVI Financial Services Commission as background guidance material rather than a binding rule. It sets out a common vocabulary for virtual currency concepts and surveys the AML/CFT risks and law enforcement experience associated with them.

• Key definitions: Distinguishes virtual currency from fiat currency and e-money, and explains convertible versus non-convertible, and centralised versus decentralised (crypto-currency) virtual currencies.
• System participants: Describes roles such as administrators, exchangers, and users within virtual currency systems.
• Risks and tools: Covers anonymising tools (Tor, mixers, Dark Wallet), cold and hot storage, and potential money laundering and terrorist financing risks.
• Case studies: Summarises law enforcement actions against Liberty Reserve, Silk Road, and Western Express International as illustrations of virtual currency misuse.

The document is explanatory and educational in nature. It does not itself impose licensing, reporting, or compliance obligations on BVI entities, but is intended to help compliance officers and firms understand virtual currency terminology and risk factors when applying existing AML/CFT obligations.

Applies to

virtual currency exchangers, virtual currency administrators, financial institutions assessing AML/CFT risk of virtual currencies