Not All Blockchain Analysis Providers Are the Same and Other Insights from FATF’s Second 12-Month Review

The Financial Action Task Force (FATF) is the inter-governmental body that sets global standards relating to anti-money laundering and combating the financing of terrorism (AML/CFT).

Earlier this month, FATF released its Second 12-Month Review of the Revised FATF Standards on Virtual Assets and Virtual Asset Service Providers, two years after the FATF finalized AML/CFT requirements on virtual assets (VAs) and Virtual Asset Service Providers (VASPs), including cryptocurrency exchanges. In this latest release, FATF evaluates progress that jurisdictions and the private sector have made in adopting the requirements since the first 12-month review, as well as monitoring for any changes in the typologies, risks and the market structure of the virtual assets sector.

There are several key takeaways from the report that we will discuss below, but one section is particularly notable: a comparison of data on peer-to-peer (P2P) transactions – transactions that do not involve a VASP – provided by seven different blockchain analysis providers.

Based on the charts FATF provided, the data provided by the blockchain analytics companies varied significantly. So significantly, in fact, that FATF noted it was “difficult to draw clear conclusions from the graphs.”

For context, FATF’s Standards do not currently apply to P2P transactions. The body reached out to Chainalysis and other blockchain analysis providers for data to better understand the extent to which virtual asset transfers occur with a VASP or without (i.e. P2P transactions), whether this has changed since the FATF revised its Standards in June 2019, and the ML/TF risk associated with P2P transactions. FATF ultimately concluded that they did not see a clear shift towards P2P transactions.

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