UK crypto businesses set to embrace FATF travel rule to strengthen financial security

UK crypto businesses gear up for Travel Rule compliance beginning in September, transmitting data for secure transactions amidst a global push

By Shashank Bhardwaj

Published: Aug 18, 2023 06:43:53 PM IST

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In a recent development, the Financial Conduct Authority (FCA) of the UK has reiterated that crypto asset businesses in the country are obligated to conform to the Financial Action Task Force (FATF) Anti-Money Laundering and Counter-Terrorist Financing rules, collectively known as the Travel Rule, beginning September 1. The UK's alignment with the FATF standards set in 2019 is expected to safeguard against illicit financial activities.

The Travel Rule, an internationally recognised measure, requires virtual asset service providers (VASPs) to exchange customer information during transactions to detect and deter potentially suspicious activities.

With the coming deadline of September 1, UK crypto businesses are preparing to ensure full Travel Rule compliance. This entails sharing customer data when sending or receiving crypto assets within the United Kingdom or in jurisdictions where the Travel Rule has already been implemented. Furthermore, businesses must uphold compliance standards even when collaborating with third-party vendors.

UK enterprises must determine the recipient's capacity to receive essential information for transactions involving VASPs in jurisdictions where the Travel Rule still needs to be in force. Additionally, they are required to gather and store pertinent data to meet regulatory demands meticulously.

The FATF, an influential international task force established by the G7 in 1989, initially introduced the Travel Rule in 2012 for traditional financial institutions, later extending its scope to encompass VASPs in 2019. However, despite these advancements, the implementation progress has been gradual, with less than half of the surveyed countries taking concrete steps to enforce the rule as of June 2023.

The UK's crypto sector is witnessing a heightened focus on regulatory compliance. In addition to the Travel Rule enforcement, new FCA marketing standards are slated to take effect in October, underscoring the UK's commitment to elevating standards within the digital asset arena. This proactive approach aligns with broader initiatives to reinforce market integrity and consumer protection.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash