The UK has decided to implement the Financial Action Task Force’s Travel Rule, effective September 1 2023. This is in an attempt to apply anti-money laundering and counter-terrorist financing regulations to on-chain activities.
Consequently, the Financial Conduct Authority (FCA) will now require UK-based Virtual Asset Service Providers (VASPs) to collect, verify, and share information on domestic and cross-jurisdictional transactions.
The FCA said in a statement that crypto asset businesses in the U.K must “comply with the rule when sending or receiving a crypto asset transfer to a firm that is in the UK, or any jurisdiction that has implemented the Travel Rule.”
The statement further spelt out procedures for receiving crypto asset transfers to or from jurisdictions without the Travel Rule, which could impede certain crypto transfers. Specifically, the statement said UK crypto businesses are required to collect information according to money laundering regulations from businesses or persons in non-Travel Rule jurisdictions.
However if such information is missing or incomplete, the business must do a risk assessment before allowing such transfers to go through. Otherwise, they are to halt the transfers until the information is determined.
The U.K is one of the countries with openness to the crypto industry. Through regulations, the country has shown that it is ready to support the industry to flourish, albeit without sacrificing the security of investors.
The FCA has taken actions both to support the industry and to protect investors in its jurisdiction. Just this year, the regulator has come up with policies such as compelling crypto businesses to give warnings with their ads.
The goal is to ensure that investors are made fully aware of the risks in crypto investing before they go into the industry. This is just one of the many policies the regulator has made.
Implementation Could be Challenging
The Travel Rule is a Bank Secrecy Act (BSA) rule [31 CFR 103.33(g)] that mandates all financial institutions to provide certain key information about financial transactions to the next financial institution if such transactions involve more than one financial institution.
Implementing it in crypto could however be a challenge, according to some experts. For example, Chainalysis UK Public Policy Lead Jordan Wain said “Companies will need to collect relevant Travel Rule information, and create a means to delay, reject or block transfers that do not meet the required criteria,” he said in a note sent to The Block.
“Third-party providers will undoubtedly have a significant role to play in helping companies with compliance at each stage of the transaction flow,” since the FCA guidance states that “firms remain responsible for achieving compliance with the Travel Rule, even when using third-party suppliers,” Wain added.
The Call For Global Crypto Regulation
Monetary organizations such as the International Monetary Fund (IMF) have called for a global framework to regulate cryptocurrencies. It seems it is in line with that call that the U.K is implementing the Travel Rule in the crypto asset industry.
Indeed, there’s a need for regulation to prevent money laundering across borders. However, XBTO Senior Compliance Officer Aja Heise said the Travel Rule “is another example of the complex web of different regulatory requirements institutions have to follow.”
The FCA however expects crypto businesses to comply with the rule, no matter what it takes, which may not be favorable to several of such businesses.
The post UK Enforces Travel Rule Regulation For Crypto Assets first appeared on CryptocyNews.com.
from CryptocyNews.com https://www.cryptocynews.com/uk-enforces-travel-rule-regulation-for-crypto-assets/
via Bitcoin News
via Bitcoin News Today
No comments:
Post a Comment