UK FCA to Implement FATF Travel Rule on September 1

An advanced report issued by the Financial Conduct Authority (FCA) revealed that crypto exchanges and businesses in the UK would be required to comply with the Travel Rule from September 1. The FCA formulated the Travel Rules outlining the regulatory requirement for Financial Action Task Force (FATF), Counter-Terrorist Financing, and Anti-Money Laundering measures.

In a blog post dated August 17, the FCA outlined the set standards for the Travel Rule that the UK-based crypto firms should comply with next month.

FCA Introducing Travel Rule Regulations in September

The implementation of the Travel Rules aims at ensuring that businesses comply with the FATF measures. Under the expected Travel Rule, the digital assets service providers (DASPs) must disclose customers’ information to the relevant authority. The regulators will then use the customer’s information to track suspicious transactions that violate the regulations.

In July last year, the policymakers in the UK granted the Travel Rule bill the final nod aiming at ensuring the DASPs meet the global AML standards. Even though the Travel Rule has encountered delays in implementation, the FCA pledged to guide key players in the crypto industry on how to meet the regulatory expectation.

According to the blog post, the FCA has outlined the procedure to comply with the Travel Rule. The FCA report underscored what the regulators expect the crypto businesses to do to meet the Travel rule requirements.

Overview of Travel Rule Standards

From September 1, the crypto exchanges in the UK must fully comply with the Travel Rule when conducting crypto transactions. The Travel Rule will require crypto businesses using third parties to be accountable for any transaction.

The FCA report illustrated that UK-based businesses engaging DASPs from other jurisdictions where the Travel Rule is not applicable to conduct due diligence to comply with the new legislation. Firstly UK investors should investigate whether their client can send and receive the necessary information.

Remarkably the Travel Rule was formulated by the FATF in 2021, aiming at improving the performance of centralized finance. After undergoing several regulatory reviews, the regulators agreed to incorporate digital assets elements in 2019.

However, the regulators were reluctant to adopt the Travel Rule after it was enacted into law in 2022. A study conducted in June demonstrated that the Travel Rule was not applied in approximately half of the countries in the United Kingdom.

The implementation of the Travel Rule implies that most of the businesses in the region will be required to comply with multiple regulatory requirements to operate as a regulated entity. In February, the FCA shared a consultative report on digital assets to the public.

The 80-page report outlined the regulatory requirements for the broader crypto and blockchain technologies concepts. After the implemetation of the Travel Rule, the FCA will introduce marketing standards for crypto assets in October.

All trademarks, logos, and images displayed on this site belong to their respective owners and have been utilized under the Fair Use Act. The materials on this site should not be interpreted as financial advice. When we incorporate content from other sites, we ensure each author receives proper attribution by providing a link to the original content. This site might maintain financial affiliations with a selection of the brands and firms mentioned herein. As a result, we may receive compensation if our readers opt to click on these links within our content and subsequently register for the products or services on offer. However, we neither represent nor endorse these services, brands, or companies. Therefore, any disputes that may arise with the mentioned brands or companies need to be directly addressed with the respective parties involved. We urge our readers to exercise their own judgement when clicking on links within our content and ultimately signing up for any products or services. The responsibility lies solely with them. Please read our full disclaimer and terms of use policy here.

Leave a Reply

Your email address will not be published. Required fields are marked *