• The Financial Conduct Authority (FCA) has announced that UK crypto businesses must comply with the FATF Travel Rule from September 1.
• All VASPs are responsible for achieving compliance, even when using third-party suppliers.
• Critics of the Travel Rule fear it as an invasion of privacy and undemocratic warrantless surveillance.
UK Crypto Businesses Brace for FATF Compliance
The Financial Conduct Authority (FCA) has issued a statement informing that UK crypto businesses must comply with the FATF Travel Rule from September 1. This is part of a larger effort to combat global money laundering and terrorist financing in accordance with 39 member countries. With this increasingly stringent regulatory climate, there are concerns about privacy invasion.
What is the FATF Travel Rule?
The FATF Travel Rule requires Virtual Asset Service Providers (VASPs) to collect and disclose sender and recipient details of cryptocurrency transfers either during or before the transaction, in order to prevent money laundering and terrorist financing. The FCA had worked closely with industry to ensure appropriate guidance on compliance before the deadline date. Furthermore, the FCA expects UK firms to maintain these same standards in overseas jurisdictions, regardless of whether they have adopted the Travel Rule yet or not.
Controversy Over Privacy Invasions
Critics have raised concerns over what they perceive as an invasion of privacy due to such tight regulations being imposed on crypto businesses. In 2021, Coin Center’s Director of Research, Peter Van Valkenburgh slammed a draft guidance document from the FATF calling their approach undemocratic and tantamount to warrantless surveillance.
Slow Implementation of FATF Standards
In June 2021, it was reported that some members were failing to implement standards set out by the organization. Furthermore, there have been discussions around whether non-Travel Rule jurisdictions should be required not to release funds if data is incomplete or missing upon receipt from those areas without proper regulation yet in place.
As global regulatory oversight tightens up around cryptocurrency activity, particularly concerning money laundering and terrorist funding prevention, there are still debates surrounding privacy invasions and democratic accountability within this space which remain unresolved at present day.