Qatar joined a number of countries across the globe that are implementing stricter laws to combat the illicit use of cryptocurrencies in terrorist financing and money laundering.
In December the Qatar Central Bank adopted new regulations that focus on combating money laundering and terrorist financing bringing its legislation in line with Financial Action Task Force (FATF) recommendations, which include adopting a risk-based approach to anti-money laundering and counter terrorism financing risks and to carry out risk assessments.
The new law sets out binding legal requirements for business and financial sectors related to combating money laundering and terrorist financing, including non-profit organizations and money transfer services. It also sets out severe penalties including financial sanctions and imprisonment for anyone convicted of violating the law, calling for the widest possible cooperation and exchange of financial information with foreign counterparts from Australia, Bangladesh, China, India, Malta, Pakistan, and the United States, among others.
According to an article from Al-Watan, Qatar has also recently implemented country-wide regulations regarding digital assets, specifically trying to combat the financing of terrorism and money laundering through virtual currencies. This has been commended as a positive development in addressing concerns raised in previous FATF assessments and on a wider geo-political level.
Following Qatar’s AML regulatory updates, the Qatar Financial Center Regulatory Authority (QFCRA) via twitter announced that all services involving cryptocurrencies have been banned throughout the Qatar Financial Center until further notice. The QFCRA — with 500 firms and $20 billion in combined total assets under management– operates its own legal, regulatory and tax infrastructure.
For purposes of the ban, the QFCRA defines virtual asset services broadly as the exchange between crypto and fiat or crypto and crypto, transfer of crypto assets, safekeeping or administration of virtual assets or tools for their management, and participation in or provision of financial services related to virtual assets. Notably however, security tokens or other digital financial or monetary instruments, regulated by the QFCRA, the Qatar Central Bank, or the Qatar Financial Markets Authority, are not included in the ban.
With the cryptocurrency ban, Qatar becomes the latest in a string of countries that have put the brakes on the promotion of financial services tied to cryptocurrencies while still exploring ways to develop a Fintech strategy to encourage innovation in cloud platform-based mobile digital payment solutions.
For example, India announced that financial firms cannot provide cryptocurrency services, and China has banned the operation of domestic cryptocurrency exchanges, even though both countries are working to develop multijurisdictional digital stablecoin backed by commodities and cloud platforms that will bypass Swift and connect their national payment systems through a mobile payment app.