FAFT Virtual Asset Guidance
Definition
Guidance from the Financial Action Task Force requiring member states to regulate virtual asset service providers (cryptocurrency exchanges) as financial institutions, applying know-your-customer and anti-money-laundering rules that enable investigators to de-anonymise ransomware payments once funds reach a regulated exchange.
- Issuing body
- Financial Action Task Force
- Regulated entities
- Virtual asset service providers, e.g. cryptocurrency exchanges
- Applied rules
- Know-your-customer and anti-money-laundering requirements
- Investigative use
- Enables de-anonymising ransomware payments at regulated exchanges
Common questions
Where in the payment chain does this guidance actually help investigators?+
The guidance does not de-anonymise the blockchain itself; it requires the regulated exchange where criminal proceeds are eventually cashed out or converted to apply KYC checks, so investigators who trace funds to that off-ramp can then request identifying account information from the exchange.
Why can attackers still evade this guidance in practice?+
Funds can be laundered through mixers, decentralized exchanges, or jurisdictions with weak enforcement of the FATF standards before reaching a compliant regulated exchange, so the guidance is most effective when combined with blockchain tracing that identifies a genuine cash-out point.
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