UK Crypto Firms to Align with FATF's Anti-Money Laundering Standards Come Septem...
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The United Kingdom’s crypto industry is on the brink of a significant shift. Starting September 1, all crypto businesses within the country must adhere to the Financial Action Task Force (FATF) Anti-Money Laundering and Counter-Terrorist Financing regulations, often called the “Travel Rule.” This directive from the Financial Conduct Authority (FCA) on August 17 reaffirms the nation’s commitment to global FATF standards established in 2019.
Understanding the Travel Rule
Designed to thwart suspicious transactions, the Travel Rule mandates that Virtual Asset Service Providers (VASPs) disclose customer data during transfers. Remarkably, the UK greenlit legislation to enforce this rule in July 2022.
From September 1, any transfer of crypto assets within the UK or to areas with the Travel Rule in place will necessitate complete adherence by UK crypto entities. Interestingly, this onus of compliance remains even if third-party vendors are involved.
In scenarios where VASPs in non-compliant regions are involved, the onus shifts. The initiating UK firm should ensure the receiving entity can accept requisite data and must, regardless, gather and retain said information. Furthermore, UK crypto businesses must exercise due diligence when they are on the receiving end.
The G7-established intergovernmental entity, FATF, introduced the Travel Rule in 2012. Initially meant for traditional financial institutions, 2019 saw its expansion to VASPs. However, global adherence has been lukewarm at best. As of June, FATF reported that out of the nations surveyed, under 50% took tangible measures toward the rule’s implementation. A 2022 study discovered that only 11 of the 29 countries with relevant legislation actively enforced it.
The Growing Regulatory Crypto Landscape in the UK
Beyond the imminent Travel Rule, UK-based crypto businesses are navigating an increasingly intricate regulatory maze. For instance, they’ll have to abide by the FCA’s freshly minted marketing standards come October. Additionally, the FCA, in February, unveiled a discussion paper delving into exhaustive crypto regulation.
The UK is unequivocally moving towards aligning its crypto regulatory framework with global standards. While this might pose challenges in the short term, it underscores the nation’s commitment to ensuring a safe and transparent digital assets ecosystem.
None of the information on this website is investment or financial advice. CryptoMode is not responsible for any financial losses sustained by acting on information provided on this website.
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