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Cryptocurrency

New global cryptocurrency system set to fight money laundering

Framework would require exchanges to confirm users' personal data

Governments around the world are looking for ways to prevent cryptocurrencies from being used for money laundering.

TOKYO -- Global standard-setters have asked the crypto industry to create a system to collect and share personal data on individuals who conduct cryptocurrency transactions. The goal is to prevent funds from being laundered, going to terrorist organizations or otherwise being put to illicit use.

Updated standards from the Financial Action Task Force, an international organization comprising more than 30 member countries and economies, will require cryptocurrency exchanges to confirm their customers' identities and store that information securely.

A new framework is being developed by cryptoexchanges that will enable them to share customer names when making transfers. The goal is to have the system up and running in 2020.

Once in place, the system would be managed by the private sector.

Many countries have not yet created regulatory regimes for cryptocurrencies, so international cooperation may speed up the development of legal measures. About 15 countries, including the G-7 members, Australia and Singapore, will develop the new system.

Japan was the first country to introduce a legal framework for cryptocurrency exchanges, setting up a registry in 2017. But with virtual currencies entirely unregulated in some places, it has been a challenge to develop uniform international rules.

Officials at the G-20 finance ministers and central bank governors meeting in June agreed to work toward introducing licensing and registration systems for exchange operators. They also agreed to work together to strengthen oversight and eliminate loopholes that allow for illicit transfers of funds.

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