By George Ward
The Qatar Central Bank (QCB) has come under fire from the Financial Action Task Force (FATF) over its lack of effort in ensuring compliance with regulatory guidelines by crypto exchanges. Accordingly, the global anti-money laundering and terrorism financing body has called on the country to double down on its enforcement within the crypto market.
Effective Measures Against Money Laundering
According to a recent report, the FATF noted that Qatar has a weak financial regulatory enforcement mechanism and has called on the country to develop its capabilities to combat the rising illicit economic activities. Moreover, the report focuses on cryptocurrency, with the agency calling on the QCB to sanction virtual asset services providers operating in the country.
“Qatar needs to improve its understanding of the evolving forms of illegal financial dealings and terrorism financing,” the statement added. The Qatar Financial Center Regulatory Authority (QFCRA) announced in December 2019 that it has prohibited virtual asset services from being conducted within or near the Qatar Financial Centre.
This directive serves as a clear indication of the regulator’s stance on cryptocurrency within the nation. Furthermore, at the time of the announcement, the QFCRA warned that violators would face severe penalties if they failed to comply with the new rules under the authority’s rights and obligations.
In addition, the fine applies to companies offering or providing transactions in digital assets. According to the recent FATF report, the body acknowledged that the Middle Eastern nation had made commendable progress in having a unified and comprehensive data collection platform regarding its citizens who own and trade in virtual currencies.
However, the FATF noted that the country still has a long way to go to ensure the progress of its digital asset regulatory framework.
Improving Investigative Efforts
The FATF strongly advised Qatar’s regulatory body to enhance its investigative actions concerning money laundering. The body stated that the nation’s “advanced analytical capacities” to detect money laundering cases remain underutilized.
Despite banning virtual asset service providers from operating in the country, the Qatari authority is actively exploring the vast opportunities a CBDC could offer. Thus, it can revolutionize financial transactions and improve the efficiency of payments nationwide.
This progressive approach showcases Qatar’s commitment to staying at the forefront of technological advancements in digital currencies. It also ensures robust regulatory measures are in place to mitigate illicit activities, fraud, and money laundering risks.
By actively exploring the possibilities of a CBDC, Qatar signals its willingness to adapt to the evolving landscape of digital finance and leverage the potential benefits it can bring to the country’s financial ecosystem. In June 2022, several reports indicated that the QCB was in the early stages of developing a CBDC.
Sheikh Bandar bin Mohammed bin Saoud Al Thani, the governor of Qatar’s central bank, later confirmed the reports. However, the governor explained that the QCB was carefully assessing the advantages and disadvantages of CBDCs while determining the most suitable technology and platform for its implementation.
Meanwhile, the CBDC has divided opinions among policymakers and critical players in the financial sector, with some seeing it as an innovative approach. In contrast, others cited the lack of privacy associated with the technology.