Starting from September 1, the UK’s crypto businesses are to adhere to the Financial Action Task Force’s (FATF) Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations. This move has been devised to align UK operations with FATF standards, set in 2019. Businesses transmitting or accepting crypto assets within the UK will be held accountable for compliance in implementing the FATF’s ‘Travel Rule’, even if they employ the skills of third-party vendors.
So what does the Travel Rule entail? Essentially, it requires virtual asset service providers (VASPs) to share customer information when making transfers to help identify any suspicious transactions. This approach to transparency and regulation has been implemented by only 29 of 98 countries surveyed, with just 11 actively enforcing the rule.
This change forms part of an ongoing progression towards more rigorous governance of the crypto world. Beginning October, UK crypto businesses will also have to align with fresh Financial Conduct Authority (FCA) marketing standards. As a result of the new wave of supervision sweeping over the sector, there’s most likely to be an uptick in both operations and marketing costs. However, it’s a change which ought to protect customers and the market from fraud and financial crime.
Challengingly, there’s an additional sting in the tail: transactions involving VASPs in jurisdictions which have not yet enforced the Travel Rule. In such cases, the onus remains on the UK-based VASP to determine whether transaction-related information can be received by the recipient, collect and store the required information regardless, and use discretion on how to proceed.
It’s a somewhat convoluted situation and perhaps not ideal for businesses attempting to navigate the already complex world of crypto. However, this could also bode well for the future, if it results in a more regulated, trustworthy and customer-centric crypto market. Given the constant evolution of the crypto landscape and myriad interpretations of FATF standards amongst nations, the full impact of these regulations will undoubtedly continue to be a topic of interest. With the mounting regulatory requirements, the crypto businesses in the UK need to weather yet another storm in order to survive and indeed, thrive in the long term.
Source: Cointelegraph
