The U.K.’s Travel Rule, which came into force on September 1, seeks to combat money laundering and terrorist financing activities in the digital asset space. This was issued by the nation’s Financial Conduct Authority (FCA) and is connected to the standards set out by the Financial Action Task Force (FATF).
Under the rule, digital currency businesses are obliged to collect, verify and showcases information about incoming transfers. If the base of the source cannot be confirmed, according to the law, then transferring of funds must be withheld.
“The travel rule advances anti-money laundering (AML) and counter-terrorist financing (CTF) efforts geographically” as noted by the head body. When sending digital assets from the U.K. to other jurisdictions, digital asset operators are expected to observe due diligence and keep records of all exchanges in line with existing legislations.
Originally outlined by the Board of Governors of the in 1995, and instated by the U.S. Financial Crimes Enforcement Network (FinCEN), the Travel Rule initially targeted facilitating UNITED States monitoring of money movements and setting reports for any cash rise greater $10,000. Further efforts to extend the Travel Rule prejudices beyond with inclusion of virtual assets (VAs) and Virtual Assets Service Providers (VASPs). The FATF then captured the UK in line with these standard brought these measures into from play.
With the rule forcing digital asset companies to not only exercise due diligence when collecting data from parties transferring money, but also enabling them to sip on funds if they can not authenticate information regarding of legs of a transaction. This will provide greater transparency to cryptocurrency dealings with lower opportunities for criminal activities cyber space.
