UK Cryptoasset Firms Required to Comply with Travel Rule, Says FCA

The United Kingdom Financial Conduct Authority (FCA) is setting out its expectations for cryptoasset companies that need to comply with a change in money laundering legislation legislated by government in July 2022.

From 1 September 2023, the ‘Travel Rule’ will come into effect, requiring cryptoasset firms in the UK collect, verify and share information about cryptoasset transfers. The new rule is designed to bring greater transparency to cryptoasset transfers, making it harder for criminals to use cryptoassets for illicit activity.

The FCA's expectations include UK crypto firms taking all reasonable steps and exercise all due diligence to comply with the Travel Rule, and remaining responsible for achieving compliance with the Travel Rule, even when using third-party suppliers.

Besides, firms are required to fully comply with the Travel Rule when sending or receiving a cryptoasset transfer to a firm that is in the UK, or any jurisdiction that has implemented the Travel Rule.

The Financial Action Task Force (FATF) has called on other jurisdictions to swiftly implement the Travel Rule. The institution has FATF highlighted in June the challenges arising from delays in adoption and different timelines for enforcement of the Travel Rule across jurisdictions.

"As a result, we have worked closely with industry to provide guidance on how to comply and what we reasonably expect of firms ahead of other countries following the UK’s position," the FCA noted.

This week, PayPal disclosed its plan to suspend crypto sales in the UK​ from October 1, in order to align with the new rules that make it mandatory for crypto companies to institute "clear risk warnings" as well as a 24-hour cooling-off period before they enable customers to put their money in crypto assets.