The Financial Action Task Force (FATF) approved a new targeted update on international virtual asset standards and a separate report on decentralized finance (DeFi) regulatory challenges during its plenary meeting in Paris held from June 17 to 19, 2026. According to the FATF, both documents focus on mitigating money laundering and terrorist financing risks and are scheduled for publication in July 2026.
Virtual Asset and DeFi Frameworks
The upcoming updates aim to push for stronger global implementation of FATF standards regarding virtual assets and virtual asset service providers (VASPs). The FATF noted that the new DeFi report specifically addresses regulatory challenges stemming from the growth of decentralized platforms and their potential exposure to illicit finance.
The plenary also authorized a public consultation on new guidance for cross-border payment transparency under Recommendation 16. Additionally, the FATF approved a report for September 2026 publication examining how underground banking and technology-driven service providers are exploited by professional money launderers.
South Korean Regulatory Stance
During the plenary sessions, South Korea’s Financial Intelligence Unit (FIU) emphasized the need to close global regulatory gaps caused by differing jurisdictional approaches to offshore VASPs. FIU Chief Lee Hyung-joo stated that these discrepancies result in regulatory arbitrage that weakens anti-money laundering and counter-terrorism financing measures.
To counter cross-border transaction risks, South Korea and several member countries recommended expanding the Travel Rule to cover all sending and receiving VASPs regardless of transaction size. The South Korean FIU announced plans to expand its local application of the Travel Rule to domestic virtual asset transactions valued below 1 million won ($720). (Read More: What is the FATF Travel Rule on Cryptocurrency?)
Gray List Updates and Leadership Changes
The FATF updated its monitoring lists, adding Bosnia and Herzegovina and Iraq to its jurisdictions under increased monitoring, commonly known as the gray list. Conversely, Algeria and Namibia were removed from the gray list following the successful completion of their anti-money laundering action plans.
The meeting concluded the presidency of Elisa de Anda Madrazo of Mexico, with Giles Thomson of the United Kingdom set to assume the FATF presidency on July 1, 2026. The plenary also appointed Vivek Aggarwal of India as the incoming vice president for a one-year term beginning July 2026.
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This article is published on BitPinas: Global AML Watchdog FATF is Updating Its Rules for DeFi and Virtual Assets
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