With just days to go until the U.K.’s travel rule designed to curb money laundering takes effect, crypto firms are facing a difficult task. Little or no effort to comply from September 1 will not do, warned the Financial Conduct Authority (FCA). The rule, set by international standard setter the Financial Action Task Force (FATF), requires firms to identify the names of people behind transactions, but adapting it to crypto’s unique features has proved controversial. The fact that somewhere it’s enforced and in other places it’s not enforced… [so] how do you get players in your jurisdiction where you want to enforce it to be compliant [when] the counterparties they need to deal with are not compliant? asked Ilya Brovin, chief growth officer from Sumsub, a verification platform.
Claire Cross, partner at law firm Corker Binning, called for a standardized approach to the travel rule across jurisdictions, saying A lack of harmonization will result in cracks in the system which can be exploited by those involved in criminal activity. Even in the 35 places that have passed laws, they still haven’t taken effect, including in the European Union, where the legislation only enters into force at the end of 2024.
Caterina Veloso, co-chair of lobby group CryptoUK’s travel rule working group, praised the open approach taken by the FCA, but said the FCA’s August guidelines could use a bit more granularity. Veloso is turning to the Joint Money Laundering Steering Group (JMLSG) for more details on how to handle inbound transfers, and how to work with non-compatible, closed protocols. She also hopes the FCA will go easy while firms tackle these problems.