FATF VP Highlights Ongoing Crypto Challenges, Emphasizes Need for Partnerships Beyond Regulators
MUMBAI: Vivek Aggarwal, the first Indian bureaucrat elected to the Financial Action Task Force (FATF), highlighted unresolved risks from virtual assets, including cryptocurrencies. He pointed to challenges posed by decentralized peer-to-peer transactions and regulatory gaps in anti-money laundering and counter-terror financing across jurisdictions. Aggarwal emphasized the need for stronger partnerships at both the FATF workstreams and national levels to address these risks, stating that regulators cannot tackle these threats alone.
Speaking at the Global Fintech Fest, Aggarwal, who serves as secretary in the ministry of culture, urged FATF to adapt its standards to emerging risks. The organization’s current two-year program includes a toolkit aimed at combating fraud linked to new technologies. Additionally, FATF is examining issues related to cybercrime and scam compounds. He advocated for risk-based regulation, suggesting that requirements should be tailored to the specific risks posed by different businesses rather than applied uniformly, as excessive regulation could burden private-sector firms.
Aggarwal noted that India has strengthened its institutional response to cybercrime, with I4C-type institutions now operational in every state and Union Territory. He mentioned the collaboration between state police and central agencies, as well as the handling of cross-border cases through mutual legal assistance and diplomacy. He also addressed the dual role of artificial intelligence in financial crime, where it can be used by criminals for deepfakes and scams, while also serving as a tool for financial institutions in transaction monitoring and customer due diligence.
He called for more advanced screening systems to minimize false positives and ensure quicker resolutions, ideally within one to two days. Both regulators and private-sector firms must work together to tackle these challenges. For fintech companies, Aggarwal identified the recognition of emerging risks and the need for investment in countermeasures as key challenges. He urged the industry to shift from peer competition to cooperation in self-regulation, risk identification, and collective risk management. He suggested that firms could jointly invest in technology platforms to reduce costs and achieve economies of scale. Aggarwal also encouraged industry associations to move beyond advocacy and focus on self-regulation and stronger partnerships to combat financial crime.
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