March 27, 2024
FCA recently introduced regulations on cryptocurrency money laundering won't entirely halt transfers to countries that don't comply with the rules.
Policy & Regulation

FCA: New Crypto Money Laundering Rules Won’t Block All Transfers to Non-Compliant Countries

The UK’s Financial Conduct Authority (FCA) stated in its published guidance on Thursday that the new rules regarding crypto money laundering don’t necessarily have to completely block transfers to countries not adhering to international norms. The controversial “travel rule,” which mandates crypto operators to identify senders and recipients of funds transfers, is set to be enforced in the UK starting September 1.

The “travel rule” was established by the Financial Action Task Force (FATF), an international standard-setting body, with the aim of preventing the use of crypto for concealing criminal funds. This measure has already been integrated into legislation in various jurisdictions, including the European Union.

While global implementation of money laundering regulations is not yet widespread, the forthcoming stricter regulations in the UK, including those for advertising, have already led companies like PayPal to suspend their crypto business operations.

In cases where funds are received from countries that have not yet adopted the travel rule and provide incomplete data, crypto firms are advised by the FCA to conduct a “risk-based assessment” to decide whether to make crypto assets available to the beneficiary. The FCA’s guidance emphasizes that firms should continue collecting customer data even if the transfer destination cannot receive it. Furthermore, when making transfers within the UK or other compliant jurisdictions, firms are required to fully comply with the new legislation.

Despite the UK government’s aspiration to establish the country as a crypto hub, the industry is concerned about achieving this goal due to more stringent regulations in areas such as crypto advertisements. Additionally, as many as 86% of firms are facing challenges in overcoming regulatory obstacles.

Image by Pixabay

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