FCA sets out expectations for UK cryptoasset businesses complying with the Travel Rule

In view of the coming into force of the so-called „travel rule“ for cryptoasset businesses which requires the collection, verification and sharing of information about cryptoasset transfers, the Financial Conduct Authority (FCA) has published a press statement. Therein, the regulator outlines its expectations of firms in this context and the approaches they shall take when sending or receiving cryptoasset transfers from jurisdictions without the Travel Rule.
#### Key expectations of the FCA in connection with the travel rule
– Reasonable compliance efforts: Firms are expected to take all necessary and reasonable due diligence measures to ensure compliance with the Travel Rule.
– Responsibility for compliance: Firms are held responsible for achieving compliance with the Travel Rule, even when they are utilizing third-party service providers.
– Full compliance mandate: Firms are required to fully adhere to the Travel Rule when engaged in sending or receiving a cryptoasset transfer from a firm located in the UK „or any jurisdiction that has implemented the Travel Rule“.
– Continuous review: Firms are encouraged to regularly review the status of Travel Rule implementation in other jurisdictions and adjust their operational procedures accordingly.
#### Key expectations in connection with the sending of cryptoasset transfers to jurisdictions without the Travel Rule:
– Firms must take reasonable steps to ascertain whether the recipient firm in the destination jurisdiction can receive the information.
– In cases where the recipient firm cannot receive the necessary information, UK cryptoasset businesses must still diligently collect and verify the information as mandated by the Money Laundering Regulations (MLRs). Furthermore, this information should be securely stored prior to effecting the cryptoasset transfer.
#### Key expectations in connection with the receipt of cryptoasset transfers to jurisdictions without the Travel Rule:
– In instances where a received cryptoasset transfer lacks complete or essential information, UK cryptoasset businesses are urged to consider the countries in which the originating firm operates and the status of the Travel Rule in those respective countries.
– These considerations should inform a comprehensive risk-based assessment, aiding in the determination of whether to make the cryptoassets available to the intended beneficiary.
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To conclude the FCA notes that it will continue to assess the implementation of the Travel Rule and its own expectations in this context and will soon issue corresponding guidance the consultation of which has ended on August 25, 2023.