• The UK’s Financial Conduct Authority (FCA) is set to enforce the FATF Travel Rule from September 1.
• The rule requires Virtual Asset Service Providers (VASPs) to collect and disclose sender and recipient details for cryptocurrency transfers.
• Critics of the Travel Rule have voiced concerns about privacy invasion, as well as the slow implementation of the rule among certain jurisdictions.
FATF Travel Rule in Effect for UK Crypto Businesses
The UK’s Financial Conduct Authority (FCA) has issued a statement informing that all crypto businesses in the UK must comply with the FATF Travel Rule from September 1. The rule was created by an intergovernmental body tasked with combating global money laundering and terrorist financing and requires Virtual Asset Service Providers (VASPs) to collect and disclose sender and recipient details for cryptocurrency transfers.
Criticism of FATF Travel Rule
Critics of the Travel Rule have voiced concerns about privacy invasion, as well as the slow implementation of the rule among certain jurisdictions. In 2021, Coin Center’s Director of Research Peter Van Valkenburgh slammed a draft guidance document from the FATF, calling its approach undemocratic and tantamount to warrantless surveillance.
UK Firms Required To Comply With Overseas Jurisdictions
The FCA expects UK firms to implement the same standards in overseas jurisdictions, even if that jurisdiction has not adopted the Travel Rule. Furthermore, firms receiving crypto from non-Travel Rule jurisdictions are asked to consider not releasing funds to recipients if data is missing or incomplete.
Tighter Regulatory Climate Contention Within Crypto Industry
The increasingly stringent regulatory climate remains a contention within the crypto industry. Tighter controls may protect users and prevent fraud but raise privacy concerns at the same time.
Conclusion
UK crypto businesses must comply with FATF’s Travel Rule from September 1st or face repercussions from their local regulator. Despite criticism over privacy invasion, tighter regulations may ultimately protect users by preventing fraud while also deterring money laundering activities around virtual assets like cryptocurrencies.