According to the United Kingdom’s Financial Conduct Authority, crypto asset firms operating in the country will be required to comply with the Financial Action Task Force’s travel rule starting on Sept. 1, 2023. Crypto asset businesses will be required to take “all reasonable steps” to ensure compliance with the travel rule. When the rule becomes effective, compliance with the rule is still expected even when a crypto asset business uses a third-party supplier.
Delays in Implementing Travel Rule
The United Kingdom’s financial services industry regulator, the Financial Conduct Authority (FCA), has said crypto firms based in the country will soon be required to adhere to the so-called travel rule. According to the regulator, crypto firms are expected to start complying with this rule from Sept 1, 2023.
In a statement released on Aug. 17, the FCA suggested that its decision to enforce the requirement aligns with the Financial Action Task Force (FATF)’s call for the swift implementation of the travel rule. Despite the FATF’s call, many countries have failed to implement the travel rule due to delays “in adoption and different timelines for enforcement of the Travel Rule across jurisdictions.”
Explaining why the UK is proceeding to implement the rule compelling crypto firms to collect, verify, and share information, the FCA said:
We have worked closely with industry to provide guidance on how to comply and what we reasonably expect of firms ahead of other countries following the UK’s position.
As a result of this step taken by the U.K., crypto asset businesses based in the country will be required to take “all reasonable steps” to comply with the rule. Compliance with the rule is still expected even when a crypto asset business uses a third-party supplier.
Crypto Firms Expected to Collect and Verify Information
In instances where funds are being sent to a jurisdiction without the travel rule, the FCA said crypto firms must still collect and verify the information before a transfer is made. If the funds are being transferred from a jurisdiction without the travel rule, the necessary risk-based assessments must be undertaken before deciding to avail these to the beneficiary or not, the regulator said.
Meanwhile, the FCA said it has been working on a guidance to help firms comply with the travel rule. The financial services industry watchdog added that crypto asset businesses can also share their thoughts about the guidance on or before Aug. 25, 2023.
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