UK’s Financial Conduct Authority (FCA) Provides Guidance on Crypto Money Laundering Rules
Companies like PayPal are halting their crypto payments services in the UK due to stricter regulations. However, the FCA has stated that the new rules don’t have to completely stop transfers to non-compliant countries. Here are the key points from the FCA’s guidance:
1. Travel Rule Measures: Crypto operators must identify the sender and recipient of funds transfers, which will take effect in the UK on September 1.
2. Risk-Based Assessment: Crypto firms should assess the risk of making crypto assets available to beneficiaries in non-compliant countries with incomplete data.
3. Customer Data Collection: Firms should still collect customer data, even if the transfer destination cannot receive it.
4. Compliance: Firms must fully comply with the new legislation when making transfers within the UK or other compliant jurisdictions.
5. Challenges for the Industry: Tighter regulations, such as restrictions on crypto ads, and regulatory hurdles are making it difficult for the UK to become a crypto hub.
The travel rule was created to prevent crypto from being used for criminal purposes and has already been legislated in jurisdictions like the European Union.
Hot Take
While the UK’s stricter regulations may pose challenges for the crypto industry, the FCA’s guidance offers some flexibility for crypto firms to continue transfers to non-compliant countries. It emphasizes the importance of risk assessment and compliance, ensuring that customer data is collected regardless of transfer limitations. The UK’s goal of becoming a crypto hub may still be achievable, but it will require navigating the complexities of global regulations and finding a balance between security and innovation.
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