UK Crypto Firms Must Comply with Travel Rule

Starting from September 1, Virtual Asset Service Providers (VASPs) in the UK are required to collect, verify, and share information on crypto transactions with firms in the UK or any jurisdiction that has implemented the Travel Rule. The UK’s Financial Conduct Authority (FCA) has stated that companies must take all reasonable steps to comply with the Travel Rule and are solely responsible for compliance, even when using third-party suppliers.

The FCA has collaborated closely with the UK’s crypto industry to develop these guidelines, which set expectations for firms ahead of other countries following the UK’s position. The goal of the Travel Rule is to enhance anti-money laundering and counter-terrorist financing efforts by helping crypto companies detect suspicious transactions and screen for possible sanction violations.

VASPs will now need to collect and verify relevant information when conducting transactions with countries that comply with the Travel Rule. For transactions involving non-Travel Rule countries, crypto firms must assess the risk before making cryptoassets available to the beneficiary.

Mexico Leading the Way in Latin America

The Travel Rule was established by the Financial Action Task Force (FATF), a global anti-money laundering watchdog. Several countries, including Mexico, have already implemented this rule. Mexico is considered a leader in Latin America, while Argentina lags behind, according to the Latin American Financial Action Task Force (GAFILAT). Brazil, Chile, and El Salvador are making good progress, while Cuba, Nicaragua, and Paraguay are making more modest advancements.

Hot Take: Compliance is Key for UK Crypto Firms

As a UK crypto firm, it is crucial for you to comply with the Travel Rule requirements. By collecting, verifying, and sharing transaction information, you contribute to the fight against money laundering and terrorist financing. The FCA expects you to take all reasonable steps in ensuring compliance, even if you rely on third-party suppliers. Stay informed about the guidelines and make risk-based assessments for transactions involving non-Travel Rule countries. It’s time to prioritize compliance and actively contribute to a more secure crypto industry.