Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an intergovernmental organization that develops and promotes global standards to combat money laundering and terrorist financing, often shortened to AML/CFT. While FATF does not directly regulate crypto users or networks, its recommendations heavily influence how countries write laws and how exchanges and other crypto businesses run compliance programs.

FATF is best known for publishing the FATF Recommendations, a framework that guides jurisdictions on preventing illicit finance across the financial system. As crypto adoption grew, FATF expanded its work to cover “virtual assets,” meaning digital representations of value that can be traded, transferred, or used for payment. FATF also addresses “virtual asset service providers” (VASPs), such as centralized exchanges, custodial wallet providers, brokers, and certain payment or transfer services.

In practice, FATF guidance pushes countries to require VASPs to register or be licensed, maintain risk based AML programs, and perform customer due diligence, including identity checks and ongoing monitoring. FATF has also studied how different types of virtual currency systems and transaction patterns can change money laundering and terrorist financing risks, which shapes the expectations regulators place on the industry.

One of the most discussed FATF concepts in crypto is the “Travel Rule,” which calls for certain identifying information about the sender and recipient to accompany qualifying transfers between VASPs, similar to requirements in traditional wire transfers. For example, when a customer withdraws crypto from one exchange to another, the two platforms may need to share and verify specific customer details, depending on local rules.