Come September 1 and crypto asset companies operating in the United Kingdom would now have to comply with the Financial Action Task Force (FATF) rules for curbing money laundering and terrorism financing, collectively referred to as the Travel Rule.
The authority reiterated the guidelines in a statement issued on August 17, 2023, and said that the move would usher in conformity with the FATF rules that were formulated in 2019. The Travel Rule refers to the FATF’s Anti-Money Laundering and Counter-Terrorist Financing standards. These rules identify crypto asset businesses as virtual asset providers (VASPs).
According to the Travel Rule, crypto asset businesses will have to share details about their customers while processing transfers. The rule is expected to bring more transparency in cryptocurrency-based transactions and guard against suspicious activities. The UK government formally passed legislation in July 2022 that made the Travel Rule an official set of standards.
As per reports, UK-based VASPs will be mandated to follow the Travel Rule starting September 1 whenever they send or receive crypto assets within the UK or other areas where the guidelines have been implemented. The rules will be applicable even if a crypto asset company is using a third-party vendor.
When transacting with VASPs in countries where the Travel Rule has not been implemented yet, the companies originating in the UK will have to determine if the recipient is capable of receiving and storing the required information. When a UK-based crypto business is the recipient of a transfer, it will be required to use discretion in case the transfer has “missing or incomplete” information. In such a case, the business should find out the country in which the other firm operates and if the Travel Rule is applicable in the nation.
Formed in 1989, the FATF is an intergovernmental task force that was established by the G7. The FATF had initially rolled out the Travel Rule for traditional financial institutions in 2012 but later decided to extend the guidelines to VASPs. According to reports, the Travel Rule has till now witnessed limited implementation. The FATH stated that by June 2023, less than half of the countries it had surveyed had taken measures to enforce the rule. A 2022 survey found that out of the 29 countries which had passed the Travel Rule, just 11 had implemented it.
The directive regarding the Travel Rule is another addition to the growing list of regulatory requirements that crypto businesses are required to follow in the UK. For instance, the new FCA marketing standard would also be implemented in October this year. Analysts feel that the new rules could have a significant impact on live cryptocurrency prices and the performance of the Top 10 cryptocurrencies.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
