Last Updated: August 21, 2023
• UK crypto businesses must comply with FATF’s Travel Rule from September 1.
• They are expected to collect and disclose sender and recipient details of cryptocurrency transfers.
• Critics have raised concerns about privacy invasion due to increasingly stringent regulatory climate.
UK Crypto Businesses Must Comply With FATF’s Travel Rule
The Financial Conduct Authority (FCA) has issued a statement informing that UK crypto businesses must comply with the Financial Action Task Force (FATF) Travel Rule from September 1. The Travel Rule is a FATF recommendation to do with guidelines for Virtual Asset Service Providers (VASPs) to prevent money laundering and terrorist financing, requiring VASPs to collect and disclose the sender and recipient details of cryptocurrency transfers, either during or before the transaction. Furthermore, the FCA expects UK firms to implement the same standards in overseas jurisdictions, even if that jurisdiction has not adopted the Travel Rule.
Concerns Remain Over Intrusive Nature Of The Travel Rule
Critics have raised concerns about privacy invasion due to increasingly stringent regulatory climate. In 2021, Coin Center’s Director of Research Peter Van Valkenburgh slammed a draft guidance document from the FATF, calling it undemocratic and tantamount to warrantless surveillance. In June, FATF reported concerns over slow implementation of the Travel Rule among jurisdictions.
FCA To Enforce Compliance On Crypto Businesses
The FCA has stated that all VASPs are responsible for achieving compliance by September 1st; even when using third-party suppliers. In a move that will spark controversy, they also told firms receiving crypto from a non-Travel Rule jurisdiction to consider not releasing funds if data is missing or incomplete.
Risk Based Assessment To Determine Crypto Release
UK crypto businesses must take into account factors such as whether or not data is complete when making risk based assessments of whether or not cryptoassets should be made available to beneficiaries from non-Travel rule jurisdictions. This could potentially lead to further delays in international transactions involving cryptocurrencies as firms may opt out of completing transactions until all data is verified correctly according to travel rule standards across global jurisdictions .
The increasing global regulatory oversight on cryptocurrencies remains an ongoing contention between protecting users against fraud while also preserving users’ privacy rights in regards to their financial information . It remains unclear at this time how much progress will be made in terms of balancing both interests as more countries adjust their regulations accordingly in order stay compliant with FATF regulations .