Category: International Bodies and Standards

Interpretive Note to Recommendation 15 (INR.15)

Also known as: INR.15, Interpretive Note to Recommendation 15 on New Technologies, Interpretative Note to Recommendation 15, R.15/INR.15

Simply put

INR.15 is guidance issued by the Financial Action Task Force (FATF) that explains how its Recommendation 15 on new technologies should be applied, with a particular focus on virtual assets and the businesses that provide virtual asset services. It sets out how countries and firms are expected to identify, assess, and manage the money laundering and other financial crime risks associated with these technologies. As an FATF instrument, it forms part of international standards rather than being binding law in itself; each jurisdiction implements it through its own legal framework.

Formal definition

INR.15 is the Interpretive Note to FATF Recommendation 15 (New Technologies) that clarifies how the standard applies to virtual assets (VAs) and virtual asset service providers (VASPs). It elaborates the FATF's expectations for risk-based measures in this sector; the source terms 'virtual asset' and 'virtual asset service provider' are defined in the FATF Glossary, which INR.15 cross-references rather than independently establishing. The FATF adopted amendments introducing INR.15 in the context of its 2019 work on new technologies, issuing a related public statement in June 2019 clarifying the amendments, and subsequently revised INR.15 to address the applicability of proliferation-financing risk assessment and mitigation. As an interpretive note within the FATF Recommendations, it constitutes international standards that jurisdictions are assessed against for compliance; it is not itself binding domestic law, and obligations take effect only as transposed into each jurisdiction's regime. Practitioners should confirm the current text, effective dates, and specific scope against the FATF's published version, as details may be updated.

Why it matters

Virtual assets and the businesses that provide services around them occupy a space that traditional AML frameworks were not originally designed to address. INR.15 matters because it is the mechanism through which the FATF translated its high-level Recommendation 15 on new technologies into specific expectations for how countries should regulate and supervise virtual asset activity, and how firms should identify, assess, and manage the associated money laundering and financial crime risks. Without this interpretive guidance, jurisdictions would lack a common reference point for what a risk-based approach to virtual assets should look like, and cross-border consistency in this fast-moving sector would be considerably harder to achieve.

Because INR.15 forms part of the FATF standards rather than binding law, its practical significance flows through the assessment process: jurisdictions are evaluated for technical compliance and effectiveness against Recommendation 15 and its interpretive note, and the FATF has published successive updates tracking how far countries have implemented these expectations. For obliged entities, this means the substance of INR.15 typically reaches them only once their own jurisdiction has transposed the standard into domestic legislation or supervisory rules, and the timing and detail of that transposition vary considerably from one regime to another.

INR.15 is also notable for its evolution. The FATF issued a public statement in June 2019 clarifying its amendments on new technologies, and later revised the interpretive note to address the applicability of proliferation-financing risk assessment and mitigation. Practitioners should treat these developments as a reminder that the FATF's expectations in this area are subject to periodic revision, and that the current text, scope, and effective dates should always be confirmed against the FATF's published version rather than assumed to be static.

Who it's relevant to

Virtual asset service providers and their compliance teams

Firms providing virtual asset services are the primary commercial audience for the expectations elaborated in INR.15, though their direct legal obligations arise from how their home jurisdiction has transposed Recommendation 15. Compliance staff at these firms generally need to understand the FATF's risk-based expectations to anticipate supervisory requirements and to design controls that detect, deter, and mitigate money laundering and related risks in their activities.

National regulators, legislators, and supervisors

Authorities responsible for drafting and enforcing AML rules use INR.15 as a reference point when transposing Recommendation 15 into domestic legislation and supervisory practice. Because the FATF assesses jurisdictions against the standard, these bodies are directly concerned with aligning their frameworks to the interpretive note's expectations, including its provisions on proliferation-financing risk assessment and mitigation.

FATF assessors and mutual evaluation teams

Those conducting technical compliance and effectiveness assessments rely on Recommendation 15 and INR.15 as the benchmark against which a jurisdiction's treatment of virtual assets is measured. The FATF's periodic updates tracking implementation form part of this assessment landscape.

Financial intelligence analysts and investigators

Analysts and investigators working on cases involving virtual assets benefit from understanding the FATF's expectations for how this sector should be regulated and monitored, as these expectations shape the supervisory and reporting environment they operate within. INR.15 provides conceptual context rather than establishing any criminal-law test, and it does not, on its own, determine wrongdoing in any individual case.

Legal and risk professionals advising on virtual asset activity

Lawyers and risk advisers supporting firms entering or operating in the virtual asset space use INR.15 to understand the international standards their clients' home regimes are expected to reflect, while advising specifically on the domestic laws that actually bind those clients. They should confirm the current INR.15 text and its local transposition, as both may be subject to revision.

Inside INR.15

Application of FATF standards to virtual assets and VASPs

INR.15 elaborates how Recommendation 15 (New Technologies) applies to virtual assets (VAs) and virtual asset service providers (VASPs). It cross-references the definitions of 'virtual asset' and 'virtual asset service provider' found in the FATF Glossary rather than defining those terms itself, and clarifies how the broader AML/CFT Recommendations should be read in the VA context.

Risk-based approach and risk assessment

It expects countries and obliged entities to identify, assess, and understand the money laundering and terrorist financing risks associated with virtual asset activities and VASPs, and to apply mitigating measures commensurate with those risks. This reflects a risk-management expectation rather than a guarantee of prevention.

Licensing or registration of VASPs

It sets out the expectation that VASPs be licensed or registered in the jurisdiction(s) where they are created, and that competent authorities take action against natural or legal persons carrying on VASP activity without the required licence or registration. As a FATF standard, this is a benchmark against which national regimes are assessed, not directly binding law.

Supervision or monitoring

It provides that VASPs should be subject to adequate regulation and supervision or monitoring for AML/CFT purposes by a competent authority (not a self-regulatory body acting as the sole supervisor), with powers to conduct inspections, compel information, and impose sanctions.

Preventive measures for VASPs

It clarifies that the preventive measures in Recommendations 10 to 21 apply to VASPs, subject to specified qualifications, including customer due diligence, record-keeping, and suspicious transaction reporting obligations in the manner adopted by each jurisdiction.

The 'travel rule' for VA transfers

It addresses the expectation that VASPs obtain, hold, and transmit required originator and beneficiary information when conducting virtual asset transfers, applying wire-transfer-style requirements (Recommendation 16) to the VA context. Implementation details and thresholds vary by jurisdiction and should be confirmed against applicable national rules.

International cooperation and proliferation-financing coverage

It supports rapid international cooperation among authorities in relation to VAs and VASPs. Recommendation 15 and its Interpretive Note were revised in June 2021 to also address proliferation-financing risk in connection with new technologies.

Common questions

Answers to the questions practitioners most commonly ask about INR.15.

Did INR.15 introduce its coverage of virtual assets in October 2020?

It is best to avoid attaching that specific date to the virtual asset provisions. INR.15 has been revised at more than one point as FATF developed its approach to virtual assets and virtual asset service providers. Practitioners should confirm the precise timing and content of each revision against the current FATF text rather than relying on a single remembered date, as the Interpretive Note has been updated over time.

Does INR.15 itself define 'virtual asset' and 'virtual asset service provider'?

No. The definitions of 'virtual asset' and 'virtual asset service provider' sit in the FATF Glossary. INR.15 cross-references those defined terms and elaborates how the FATF Recommendations apply to them, but it does not itself set out the definitions. When citing the meaning of these terms, refer to the Glossary; when citing how obligations apply, refer to INR.15.

How should a jurisdiction approach applying the FATF Recommendations to VASPs under INR.15?

INR.15 explains how the existing Recommendations are intended to apply to virtual asset activities and VASPs, generally requiring that VASPs be subject to AML/CFT obligations comparable to other obliged entities, including risk assessment, licensing or registration, and supervision. Because the FATF Recommendations are standards rather than binding law, the specific obligations depend on how each jurisdiction transposes them into national law, and implementation timing and scope vary.

What licensing or registration expectations does INR.15 set out for VASPs?

INR.15 indicates that VASPs should generally be required to be licensed or registered, and be subject to supervision or monitoring by a competent authority. The precise mechanism, licensing versus registration, which authority is responsible, and the conditions attached, is determined by national law. Firms should confirm the applicable requirements and any thresholds against the regime in each jurisdiction where they operate, as approaches diverge.

How does INR.15 relate to the so-called 'travel rule' for virtual asset transfers?

INR.15 addresses how obligations analogous to those for wire transfers are intended to apply in the virtual asset context, including expectations around obtaining, holding, and transmitting originator and beneficiary information. The operational details, covered transaction types, information fields, and any de minimis thresholds, depend on how each jurisdiction implements the standard, and exact requirements should be confirmed against the applicable local rules.

Does INR.15 address proliferation-financing risk, and how should firms treat it?

INR.15 was revised to incorporate proliferation-financing risk considerations, reflecting FATF's broader integration of that risk into its standards. In practice, obliged entities should treat proliferation-financing risk as a distinct risk area to be identified, assessed, and mitigated alongside money laundering and terrorist financing risks, rather than as an afterthought. As with other elements, the concrete obligations flow from national transposition, which firms should verify against the applicable regime.

Common misconceptions

INR.15 itself defines what a 'virtual asset' and a 'virtual asset service provider' are.

The formal definitions of 'virtual asset' and 'virtual asset service provider' are set out in the FATF Glossary. INR.15 cross-references those glossary definitions and explains how the standards apply to them, but it is not the source instrument for the definitions.

INR.15 is binding law that VASPs must comply with directly.

The FATF Recommendations and their Interpretive Notes are international standards, not directly enforceable law. Obligations on VASPs arise only when jurisdictions implement these standards through national legislation or regulation, and the details, thresholds, and scope can diverge between regimes.

INR.15 has only ever concerned money laundering and terrorist financing.

Recommendation 15 and INR.15 were revised in June 2021 to also address proliferation-financing risk associated with new technologies, so the interpretive note's scope extends beyond ML/TF in its current form.

Best practices

Read INR.15 together with the FATF Glossary, since the operative definitions of 'virtual asset' and 'virtual asset service provider' reside in the Glossary and INR.15 only cross-references them.

Confirm how the FATF standard has actually been transposed in each relevant jurisdiction, including licensing or registration requirements, supervisory arrangements, and travel-rule thresholds, rather than assuming a single global rule applies.

Conduct and document a risk assessment of virtual asset activities and counterparties, and calibrate mitigating controls to the identified ML, TF, and proliferation-financing risks, treating controls as measures to manage risk rather than eliminate it.

Verify the licensing or registration status of counterparty VASPs and treat unregistered or unlicensed operators as a heightened-risk factor warranting further scrutiny.

Build travel-rule capabilities to obtain, hold, and transmit required originator and beneficiary information, confirming the applicable data requirements and any de minimis thresholds against the governing national rules.

Update policies and training to reflect the June 2021 revisions, ensuring proliferation-financing risk is incorporated alongside money laundering and terrorist financing considerations.