The United Kingdom passed laws in 2022 to become one of the few countries to comply with the extension of the Travel Rule to cryptocurrency.
Beginning Sept. 1, crypto asset businesses in the United Kingdom will be required to comply with Financial Action Task Force (FATF) Anti-Money Laundering and Counter-Terrorist Financing rules, known collectively as the Travel Rule, according to a statement from the Financial Conduct Authority (FCA). This will bring the United Kingdom in line with FATF criteria set for 2019.
The Travel Rule requires virtual asset service providers (VASPs) to provide customer information when transferring funds in order to detect fraudulent transactions. The United Kingdom passed laws in July 2022 to begin enforcing the Travel Rule. When shipping or receiving crypto assets in the U.K. or jurisdictions that have previously implemented the rule, U.K. crypto firms will be expected to completely apply the Travel Rule by Sept. 1. Businesses will also be held accountable for compliance when using third-party vendors.
When trading with VASPs in jurisdictions where the Travel Rule has not been adopted, the originating U.K. business must take efforts to ascertain if the receiver is capable of receiving the required information in any way, as well as collect and keep the information in any instance. When a crypto firm in the United Kingdom receives a transfer, it must exercise caution:
The FATF, a G7-formed intergovernmental task committee founded in 1989, developed the Travel Rule in 2012 for traditional financial institutions and expanded it to VASPs in 2019. It has made modest headway in implementing the rule, reporting in June that less than half of the countries surveyed had taken any actions to apply the requirement. According to a 2022 poll, 29 of 98 countries had established law on the norm, but only 11 were enforcing it.
Crypto asset enterprises in the United Kingdom are subject to an increasing number of regulatory regulations. In October, new FCA marketing regulations will go into effect. In February, the FCA issued a consulting paper on comprehensive crypto regulation.