> For the complete documentation index, see [llms.txt](https://micapass.gitbook.io/micapass/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://micapass.gitbook.io/micapass/welcome/regulatory-context.md).

# Regulatory Context

Decentralized ecosystems are not typically accustomed to regulations. However, recent developments, such as the incident where CZ was compelled to make a $4 billion payment due to non-compliance with AML standards, indicate that governments are increasingly scrutinizing all digital assets. 

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We're creating a specialised GPT system with a team of lawyers, AI, and DeFi experts. This platform will swiftly inform you of current regulations and what's on the horizon. Stay tuned for its launch!
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## FATF recommendations

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Virtual asset service providers are increasingly subject to FATF recommendationsn all around the world
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🛂  Implement **KYC/AML procedures to combat illicit activities**.

✈️ **Travel Rule Compliance**: Collect and share user information for transactions that exceed a certain threshold.

⚠️ **Suspicious Activity Reporting.** Establish mechanisms to detect and report suspicious transactions to combat money laundering and terrorist financing.

📄 **Sanctions Lists**: Check against international sanctions lists to ensure the platform is not facilitating transactions related to sanctioned entities or countries.

## MiCA law

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The new EU law, MiCA, mandates AML compliance for crypto assets service providers. Other countries follow.
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MiCA, Markets in Crypto-Assets Regulation, a European Union framework aimed at regulating crypto-assets and related service providers. Main points are:

🆔 **KYC/AML Requirements**: Implement Anti-Money Laundering and Know Your Customer policies and procedures.

✅ **Regulatory Audits.** Prepare for and cooperate with periodic audits from regulatory authorities.

Countries such as Singapore, Switzerland, Canada, Australia, Japan, and more will follow the EU's MiCA regulations for crypto assets.

## Sanctions

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Sanctions are enforced even in the absence of concrete regulations
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🌪 In 2021, **Tornado Cash** was discovered to have facilitated $10 million in illegal transactions. As a result, in 2022, the founders were prosecuted and sentenced to five years in prison.

🥶 **Ooki DAO** processed transactions linked to sanctioned countries, drawing attention from U.S. regulators. As a result, the DAO had to freeze assets and is now under investigation for non-compliance.

Governments and institutions continue to imprison crypto owners and developers on charges of money laundering.