- 09 September 2024
The United Nations Counter-Terrorism Centre (UNCCT) of the United Nations Office of Counter-Terrorism (UNOCT), the Federal Financial Monitoring Service of the Russian Federation (Rosfinmonitoring), and the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) launched, on 9 September 2024, a joint knowledge product, titled: “Countering the Misuse of Virtual Assets and Virtual Asset Service Providers for Terrorism Financing Purposes: Handbook Based on EAG practices.”
The context
The emergence of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) has brought significant positive changes to our world, driving innovation, enhancing efficiency, and promoting financial inclusion. However, certain characteristics of VAs also make them attractive to criminals, especially with the development of sophisticated digital tools such as mixers, tumblers, and anonymizers, which are designed to obscure transactional links to the original currency owners.
Facing varying levels of risk posed by the exploitation of VAs and VASPs by terrorist entities, Member States of the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) have made considerable and commendable progress in integrating digital financial technologies into their domestic systems, demonstrating a strong commitment to enhance their financial systems while ensuring compliance with relevant international standards.
The Financial Action Task Force (FATF) and the United Nations (UN) have established critical frameworks aimed at mitigating the risks associated with the use of VAs and VASPs for criminal and terrorist financing purposes.
FATF Recommendation 15 provides a blueprint for implementing a risk-based approach to either prohibiting or regulating virtual assets, emphasizing the need to identify, assess, and manage specific risks in this domain.
In its resolution 2462 (2019), the United Nations Security Council called upon Member States to enhance the traceability and transparency of financial transactions by assessing and addressing potential risks associated with virtual assets1.
About the report
The report explores the characteristics of VAs and VASPs, the risks associated with their misuse for terrorism financing (TF), and the effectiveness of existing measures to detect, investigate, prosecute, seize, and confiscate VAs in EAG Member States. It aims to enhance the understanding of practices established by EAG Member States and the need for harmonized approaches among the region, aligned with international and Financial Action Task Force (FATF) standards on VA/VASPs among EAG Member States.
This report is the product of a joint initiative of UNOCT/UNCCT, the Federal Financial Monitoring Service of the Russian Federation (Rosfinmonitoring), and EAG. It has been made possible with the financial support from the Russian Federation. The UNCCT Global Programme on Detecting, Preventing and Countering the Financing of Terrorism (CFT Programme) is also generously funded by the Kingdom of Saudi Arabia and the Republic of India.
The United Nations Counter-Terrorism Centre (UNCCT) of the United Nations Office of Counter-Terrorism (UNOCT), the Federal Financial Monitoring Service of the Russian Federation (Rosfinmonitoring), and the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) developed this report, titled: “Countering the Misuse of Virtual Assets and Virtual Asset Service Providers for Terrorism Financing Purposes: Handbook Based on EAG practices.” This Handbook provides an overview of the practices of Member States in the EAG region on detecting, preventing, and countering the use of virtual assets to finance terrorism, with a particular focus on the Central Asia region.