The Crypto Travel Rule, which comes into force on September 1, aims to curb money laundering and terrorist financing activities carried out with digital assets.
Crypto asset companies in the UK could start holding certain crypto transfers to comply with the new Crypto Travel Rule that came into effect on September 1.
Rules targeting virtual asset service providers were introduced by the Financial Conduct Authority on Aug. 17 and ensure that UK-based VASPs (Virtual Asset Service Providers) “collect, verify and share information” related to crypto asset transfers.
If an incoming payment is received from a person or entity from a foreign jurisdiction that has not implemented the Travel Rule, the VASP must perform a “risk-based assessment” on “whether to make the crypto assets available to the beneficiary.”
The Travel Rule is designed to bring greater transparency to cryptoasset transfers, making it harder for criminals to use #crypto for illegal activity.https://t.co/kmB6rgMn5e
— Financial Conduct Authority (@TheFCA) August 17, 2023
The same rule would also apply to Brits wishing to send payments outside of the UK.
The Travel Rule was created by the UN Financial Action Task Force (FATF) in June 2019. The UK passed legislation to start apply the Travel Rule in July 2022.
It tries to prevent money laundering (AML) and terrorist financing (CTF) activities carried out on the blockchain.
Other countries that have adopted the Travel Rule include the United States, Germany, Japan, Singapore, Switzerland, Canada, South Africa, the Netherlands, and Estonia, according to Sygna.io.
On June 23, the FATF singled out member states for not sufficiently implementing the rule after a survey revealed that more than half of them have not taken any implementation steps.
A March 2022 survey by the FATF found that only 29 of the 98 jurisdictions at the time met the necessary requirements as part of the travel rules, and a small subset of these jurisdictions had begun implementation.
Ian Andrews, the marketing director of the blockchain analytics platform Chanalysis, explained in April 2022 that coordinating the exchange of information between VASPs across borders will be a “rather difficult problem” to solve, at least at first.
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