Changes to AML Legislation: FCA Sets Expectations for UK Crypto Businesses Complying with The Travel Rule

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The Financial Conduct Authority (FCA) has recently released guidelines outlining expectations for UK cryptoasset businesses in complying with the Travel Rule. This new legislation requires cryptoasset businesses to collect, verify, and share information about cryptoasset transfers starting September 1, 2023. The Travel Rule aims to align practices for cryptoasset businesses with those common in other areas of financial services, as recommended by the Financial Action Task Force (FATF).

The FCA emphasises that firms must take all reasonable steps to comply with the Travel Rule and remain responsible for achieving compliance, even when using third-party suppliers. They also stress the importance of fully complying with the Travel Rule when sending or receiving cryptoasset transfers to or from the UK or any jurisdiction implementing it.

In cases where a jurisdiction does not have the Travel Rule in place, firms should still take reasonable steps to establish whether the receiving firm can receive the necessary information. If the information cannot be received, UK cryptoasset businesses must still collect and verify the required information as per the Money Laundering Regulations (MLRs) and store it before making the transfer.

The FCA will continue to review their expectations as global adoption of the Travel Rule progresses and communicate any changes accordingly. They are also collaborating with industry, the Joint Money Laundering Steering Group (JMLSG), and HM Treasury (HMT) to provide guidance to help firms comply with the Travel Rule.

Read the full press release here:

What is the Travel Rule?

The implementation of the Travel Rule aims to enhance transparency in cryptoasset transfers and prevent the misuse of cryptoassets for illicit activities. It strengthens anti-money laundering (AML) and counter-terrorist financing (CTF) efforts by assisting cryptoasset businesses in detecting suspicious transactions and conducting effective sanctions screening.

By introducing more robust standards like the Travel Rule and the financial promotions regime for cryptoassets, the FCA aims to protect consumers, maintain market integrity, and support the competitiveness of the UK’s cryptoasset sector.

Managing Risk Exposure: AML Compliance Specialists 

As AML & Compliance specialists, we understand the challenges cryptocurrency businesses and financial institutions face in complying with their obligations and regulatory requirements and changes like the Travel Rule. Our team can assist you in managing risk exposure and implementing effective AML compliance measures.

By working with AML and Compliance, a business can be assured that we will bring the required level of knowledge and expertise needed to perform a risk assessment that has value to the business and is not simply a box-ticking exercise. Our team can also provide a full range of services that include:

To learn more about the importance of AML compliance for crypto financial institutions, refer to our previous blog post, “Crypto Financial Institutions Urged to Take AML Compliance Seriously.”

Get In Touch With Our Compliance Specialists

To enquire about our risk assessment services and how AML and Compliance can work with your business, call us on 0203 985 8553, email us or complete an enquiry form. Click here for more information about our services.

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