UK CRYPTO Recommendation 16 [TRAVEL RULE] will take effect Sept. 1st

In the UK, Recommendation 16 will take effect Sept. 1, and institutions will be required to collect and report data involving UK-based persons who engage with any digital asset transfers exceeding 1,000 pounds.

The UK is one of 62 jurisdictions of more than 200 under the International Financial Action Task Force (FATF) that has or is planning to update its “travel rule” to include digital assets, according to data from the FATF.

Under the new rule, known as the FATF’s Recommendation 16, virtual asset service providers and financial institutions must collect and share the personal data of those involved in certain crypto transfers.

Required information includes:-

• The originating party’s name,
• Address, account number/transaction identifier,
• Personal document number,
• Customer identification number, or the data and place and birth.
• Recipients’ names and account numbers.

The FATF has expressed public frustration with jurisdictions that have failed to act on implementing the Travel Rule, noting that different international standards make the programs’ goal – to combat money laundering – more difficult.

The FATF wrote in a June 2023 report on the current implementation status.

• “The lack of progress in this area is a serious concern as the nature of the Travel Rule means that its effectiveness depends on consistent, global implementation and enforcement”
• “The FATF urges jurisdictions to make immediate progress to enact and enforce legislation implementing the Travel Rule.”

Plus, even among the countries that have agreed to comply, the policies differ, making it difficult for companies to meet requirements. In the US, the threshold for transactions is $3,000; in Canada, institutions also have to record the names and addresses of transaction beneficiaries.

Discrepancies aside, attorneys from the international law firm Clifford Chance said that general information reporting requirements will take a lot of work to meet in the UK and across the board.

A recent Clifford Chance report reads.

• “Cryptoasset Service Providers are unable to identify from the wallet address whether a counterparty to the cryptoasset transfer is an individual or another Cryptoasset Service Provider, and it is not possible to identify the location of the sender’s wallet,”
• “This challenge is compounded by the fact that the originator of the transaction (likely the Cryptoasset Service Provider’s client) may not have this information.”
• The rules also do not account for unhosted wallets, which will be exempt from reporting requirements,   
• “This is an interesting approach given that transfers to unhosted wallets pose a heightened risk of money laundering,”  

SOURCE

https://blockworks.co/news/uk-travel-rule-crypto-reporting-requirements