‘Travel Rule’ Clarification for UK Cryptoasset Businesses
Beginning on September 1, 2023, the cryptocurrency environment in the UK will undergo a substantial change. Businesses that deal in cryptoassets will be required to collect, verify, and distribute data on cryptoasset transfers under a rule known as the “Travel Rule.”
This action is not limited to the UK. Other international regions have been asked by the Financial Action Task Force (FATF) to swiftly enact the Travel Rule. The goal is to align the transaction protocols used by cryptoasset enterprises with the standards used by other financial sectors.
What Does This Mean for UK-Based Crypto Companies?
1. Adherence and Diligence: Businesses must carefully follow the Travel Rule. Even when businesses work together with outside providers, they still have this obligation.
2. Transactions between UK-based companies or those in regions where the Travel Rule is in effect: Complete compliance is required.
3. Keep Up to Date: Businesses should continuously track the Travel Rule’s implementation around the world and adjust their operations as necessary.
Using Non-compliant Jurisdictions to Send Cryptoassets:
Companies should determine if the receiving company can supply the essential information. Otherwise, before making the transfer, UK crypto firms should collect, verify, and archive the necessary data in accordance with the Money Laundering Regulations (MLRs).
Getting Cryptoassets from Laws that Are Not Compliant:
UK crypto companies must determine the sending nation’s position on the Travel Rule when incoming transactions are incomplete.
As a result, before releasing cryptoassets to the receiver, a risk-driven appraisal must be completed.
This advice attempts to maintain a compliant and transparent crypto environment. For firms to succeed in this new regulatory environment, knowledge and readiness are essential.