- Crypto asset businesses in the United Kingdom may start withholding certain crypto transfers
- The new Travel Rule for crypto came into effect on Sept. 1
- The rules require that virtual asset service providers collect, verify, and share information related to crypto transfers
- If an inbound payment is received from an overseas jurisdiction that hasn’t implemented the Travel Rule, the VASP must make a risk-based assessment
- The same rule applies to Brits looking to send payments outside of the U.K.
- The Travel Rule was created by the UN agency Financial Action Task Force in June 2019
- Other countries that have adopted the Travel Rule include the U.S., Germany, Japan, Singapore, Switzerland, Canada, South Africa, the Netherlands, and Estonia
- A survey revealed that more than half of the member states failed to sufficiently implement the rule
- Coordinating the exchange of information between VASPs cross-borders will be a “pretty hard problem” to solve initially
The Financial Conduct Authority (FCA) in the United Kingdom has introduced a new Travel Rule for crypto that came into effect on September 1, which requires crypto asset businesses in the country to comply with certain regulations. The rule was first introduced by the FCA on August 17, targeting virtual asset service providers (VASPs) based in the U.K. It requires them to collect, verify, and share information relating to crypto asset transfers.
If an inbound payment is received from a person or entity from an overseas jurisdiction that hasn’t implemented the Travel Rule, the VASP must make a risk-based assessment as to whether to proceed with the transfer. This rule also applies to Brits looking to send payments outside of the U.K.
The Travel Rule was created by the UN agency Financial Action Task Force (FATF) in June 2019 and aims to enforce Anti-Money Laundering and Counter-Terrorist Financing rules on activities carried out on-chain. Other countries that have adopted the Travel Rule include the U.S., Germany, Japan, Singapore, Switzerland, Canada, South Africa, the Netherlands, and Estonia, according to Sygna.io.
A survey conducted by FATF revealed that more than half of the member states have failed to sufficiently implement the rule. Coordinating the exchange of information between VASPs across borders is expected to be a complex challenge to solve.
