: Crypto Business Brace for New Regulatory Net: UK to Implement FATF Travel Rule

• The UK’s Financial Conduct Authority (FCA) has issued a statement informing that UK crypto businesses must comply with the 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.
• The FCA expects UK firms to implement the same standards in overseas jurisdictions, even if that jurisdiction has not adopted the Travel Rule.

Introduction

Regulatory oversight of cryptocurrency businesses is tightening as the UK falls in line with FATF compliance. The increasingly stringent regulatory climate remains a contention within the crypto industry, raising concerns about privacy invasion versus protecting users from fraud. This article discusses how the UK’s Financial Conduct Authority (FCA) is enforcing FATF’s Travel Rule, and what this means for crypto businesses in the country.

What Is the FATF and Its Travel Rule?

The Financial Action Task Force (FATF) is an intergovernmental organization based in Paris, France and comprises 39 member countries. It was established to combat global money laundering and terrorist financing by setting international financial crime standards that are applicable worldwide. One such standard is known as ‘The Travel Rule’, which requires Virtual Asset Service Providers (VASPs) – entities providing services related to cryptocurrencies – to collect and disclose sender/recipient details of cryptocurrency transfers either during or before transactions take place.

Compliance Deadline Set by FCA

The FCA has now issued a statement informing all VASPs operating in the UK must comply with The Travel Rule by September 1st 2021. In order for VASPs to achieve compliance, they may need to use third-party suppliers where necessary; however it is their responsibility alone to ensure they are compliant with FATF’s regulations. Additionally, it states that even if other jurisdictions haven’t adopted The Travel Rule yet, it expects firms in those areas to still maintain these standards when dealing with cryptoassets originating from outside of their jurisdiction.

Controversy Surrounding The Implementation

The implementation of stronger regulations has been met with criticism from some members of the crypto industry who believe it goes too far in terms of privacy invasion – particularly around collecting personal data like name, address etc.. Furthermore, Coin Center Director of Research Peter Van Valkenburgh called out an initial draft guidance document released by FATF calling its approach undemocratic and warrantless surveillance-like behaviour .

Conclusion

The FCA has set a September 1 compliance deadline for virtual asset service providers operating in the UK to adhere to FATF’s travel rule guidelines regarding sending/receiving cryptocurrency transfers; while this may help protect against fraudsters there have been criticisms surrounding privacy violations this could cause . Nonetheless , it appears likely most crypto businesses will be expected adhere strictly adhere these new rules over time .

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