In a bid to tackle concerns surrounding money laundering and terrorist financing associated with cryptocurrencies, the Presidency of Peru has introduced a new decree. This mandate requires all cryptocurrency exchanges operating within the country to comply with anti-money laundering (AML) regulations. The move signifies an important step in Peru’s governmental efforts to regulate the cryptocurrency ecosystem and safeguard its financial system from illicit activities.

To adhere to the decree, virtual asset service providers, including both individuals and companies operating within Peru, are now required to disclose information to the Financial Intelligence Unit (UIF-Peru). The UIF-Peru is responsible for receiving, analyzing, and transmitting information related to the identification of money laundering and terrorist financing activities.

The definition of “Virtual Asset Service Providers” encompasses entities engaged in various cryptocurrency-related operations, such as exchanging virtual assets for fiat or legal tender currencies, exchanging various virtual assets, transferring virtual assets, providing custody and administration services for virtual assets, and offering financial services associated with the sale or offer of virtual assets.

One of the primary objectives of this decree is to ensure that cryptocurrency exchanges in Peru align with the recommendations set by the Financial Action Task Force (FATF). The FATF’s “travel rule,” which mandates exchanges to adhere to Know Your Customer (KYC) standards, is particularly emphasized. By collecting and sharing customer data, exchanges aim to increase transparency and prevent illicit activities within the crypto space.

While the decree is already in effect, the Financial Intelligence Unit is expected to provide more specific guidelines in the coming days regarding the prevention of money laundering and terrorist financing for cryptocurrency exchanges in Peru. These guidelines will further clarify the obligations and responsibilities of virtual asset service providers operating within the Andean country.

The implementation of these new regulations has not come without controversy. The Blockchain & DLT Association of Peru (ABPE), a community consisting of professionals and enthusiasts advocating for the adoption of bitcoin and blockchain technology, has expressed dissatisfaction. They claim that the proposal was formulated without their involvement and consultation with the broader Peruvian community. In response, the ABPE is urging Congress to initiate a dialogue with representatives from the cryptocurrency ecosystem to ensure that all perspectives are considered in the regulatory process.

As the use of cryptocurrencies continues to gain global traction, many countries are grappling with the challenges posed by their decentralized and pseudonymous nature. Peru’s decision to tighten regulations and subject cryptocurrency exchanges to AML guidelines reflects the worldwide trend of governments seeking to strike a balance between fostering innovation and safeguarding their financial systems.

It remains to be seen how these new regulations will shape the cryptocurrency landscape in Peru and how industry stakeholders will respond to the government’s call for increased compliance. However, the decree represents a significant leap forward in Peru’s efforts to combat financial crimes and protect its economy from the potential risks associated with cryptocurrencies.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.