- United Kingdom’s Financial Conduct Authority (FCA) will be enforcing the “Travel Rule” starting next month.
- The regulations set out by the Financial Action Task Force will mandate crypto businesses to collect, verify and share information about cryptoasset transfers.
- Of the 151 jurisdictions that responded to FATF’s 2023 Survey, less than half have implemented Travel Rule, leaving a huge gap in creating a money laundering-free environment.
The United Kingdom is making rapid advancements in setting up cryptocurrency regulations in the country. Moving forward, the citizens of the country dabbling in crypto asset transactions will be subjected to sharing their information with the government to ensure no illicit use of the digital currency is being conducted.
Crypto Travel Rule to come into effect in the United Kingdom
The Financial Conduct Authority (FCA) on August 17 announced that starting September 1, it would be enforcing the Travel Rule in the United Kingdom. The regulatory body will be implementing the rules set out by the Financial Action Task Force (FATF) to promote anti-money laundering and illicit use of crypto assets.
The FCA noted that in line with the FATF’s guidelines, crypto service providers will:
- Take all reasonable steps and exercise all due diligence to comply with the Travel Rule.
- Firms remain responsible for achieving compliance with the Travel Rule, even when using third-party suppliers.
- Fully comply with the Travel Rule when sending or receiving a cryptoasset transfer to a firm that is in the UK or any jurisdiction that has implemented the Travel Rule.
- Regularly review the implementation status of the Travel Rule in other jurisdictions and adapt business processes as appropriate.
The FCA also stated that if cryptocurrencies are being sent by UK citizens to a country without Travel Rule, the service provider must still collect and verify the information as required by the Money Laundering Regulations (MLRs) and should store that information before making the cryptoasset transfer.
The regulatory body added,
“We will keep our expectations under regular review as global adoption of the Travel Rule develops and we will communicate any changes accordingly.
Earlier this June, the FATF, a global money laundering and terrorist financing watchdog, highlighted the challenges arising from the delayed adoption and implementation of the Travel Rule. Of the 151 jurisdictions that responded to FATF’s 2023 Survey regarding the Travel Rule., more than half are yet to take any step towards implementing it.
With the rapid adoption of digital assets, this is a concern for the FATF since the increase in crypto service providers also increases the risks of money laundering and illicit use of cryptocurrencies across the globe.
Thus, the FCA moving forward with the Travel Rule would mark a critical step in establishing a positive crypto environment in the country. In late Q2, the country also passed the Financial Services and Markets Bill (FSMB), resulting in cryptocurrency-related activity now being recognized as a regulated financial activity.
Read more – UK passes bill to recognize crypto as “regulated financial activity”, boosts adoption in Europe
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