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Workshop on conducting Sectorial Money Laundering and Terrorism Financing Risk Assessment of Virtual Assets and Virtual Assets Service Providers

Online Workshop 15 November 2021
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Workshop on conducting Sectorial Money Laundering and Terrorism Financing Risk Assessment of Virtual Assets and Virtual Assets Service Providers

On the 15th of November of 2021, the Economic Crime and Cooperation Division of the Council of Europe held a full-day online workshop to present and train the participants of nine countries on the recently developed Council of Europe Methodology for the Sectorial Assessment of Money Laundering and Terrorist Financing (ML/TF) Risks related with Virtual Assets (VAs) and Virtual Assets Service Providers (VASPs), as well as to discuss the VAs and VASPs-related ML/TF risks.

The workshop brought together representatives of the competent authorities of Azerbaijan, Bulgaria, Croatia, Czech Republic, Estonia, Portugal, Romania, Slovakia and Ukraine and it was organised within the EU/Council of Europe Technical Support Instrument Programme.

In the first session of the Workshop, representatives of Europol, Estonian FIU, FIU Luxembourg and a representative of the private sector presented their views and practical experiences related to the topic. The second session was dedicated to the presentation of the Council of Europe Methodology for the Sectorial Assessment of ML/TF Risks related with VAs and VASPs.

The Europol representative highlighted the different typologies of money laundering through the use of VAs and VASPs. Moreover, different cases and investigations were presented to illustrate the use of VAs by criminal organizations and the geographical reach of its use. The representative of the Estonian FIU detailed the lessons learnt from the Estonian assessment of VAs and VASPs, particularly the process – with an emphasis on the survey performed - and the methodology, as Estonia was one of the first countries to carry out such an assessment. The representative of the private sector reflected on the similarity of ML/TF risks faced by both VASPs and FIs, the measures at the disposal of VASPs to face these risks and presented the tools that can help VASPs mitigate ML/TF risks, particularly the ones related to the blockchain analytics. The representative of the FIU Luxembourg, shared the experience of Luxembourg in the “Vertical risk assessment on Virtual Assets”, particularly the methodology of the assessment, the entities involved, and the inherent risks posed alongside the importance of VASPs understanding the environment they act on.

In the second session of the workshop, the Council of Europe expert presented the Council of Europe Methodology for the Sectorial Assessment of ML/TF Risks related with VAs and VASPs. The focus was placed on the format of the methodology, the main elements of the risk assessment process, the data gathering and analysis tools and the actual implementation of the methodology. Important practical aspects and examples were discussed particularly with regard to the identification and understanding of the current state of VA and VASP-related activity in the country, the analysis of threats and vulnerabilities related to VAs and VASPs (including evaluating related likelihood and impact) and the risk treatment following the sectorial assessment.

Besides serving as a platform for the discussion and sharing experiences, this workshop aimed to ignite the process of sectorial assessments of ML/TF risks in the participating countries supported by the Council of Europe in the framework of the joint EU/Council of Europe Technical Support Instrument and the Partnership for Good Governance II Programmes.

The activity was organised within the framework of the Technical Support Instrument project on “Risk-based supervision of anti-money laundering and financing of terrorism in Croatia”, funded by the European Commission Directorate General for Structural Reform Support (DG REFORM) and the Council of Europe and implemented by the Council of Europe.