Which businesses must comply with the UK Travel Rule?
Since 2020, Cryptoasset Businesses (CBs) have been considered obliged crypto entities under the UK anti-money laundering regulations. These (CBs) can fall within the definition of either a cryptoasset exchange provider (CEP) or a custodial wallet provider (CWP).
Cryptoasset Businesses are required to register with the FCA and comply with the Travel Rule.
Download the UK Travel Rule Overview
Who is the supervisory body for VASPs in the UK?
The Financial Conduct Authority (FCA) is responsible for overseeing cryptoasset businesses and implementing the Travel Rule in the United Kingdom.
What is the Travel Rule threshold in the UK?
Although the Travel Rule applies to every cryptoasset transfer involving a Cryptoasset Business in the UK, and no value is exempt, transactions above EUR 1000 may require additional information.
What Travel Rule information is required by the UK’s FCA?
The Travel Rule in the UK requires at least basic information for every cryptoasset transaction. Transfers between UK-based VASPs only need to meet basic information requirements. Transactions where at least one of the VASPs are based outside the UK and the value is above the de minimis threshold (EUR 1000), then additional information is required.
The following table visually summarises the UK Travel Rule requirements:
* When the originator or the beneficiary is a firm. Account numbers must be and remain unique to a customer.
What are the Travel Rule requirements for VASPs transacting with unhosted wallets in the UK?
The collection of Travel Rule information in transfers involving unhosted wallets (self-hosted wallets) applies a risk-based approach.
For transfers involving a unhosted wallet, Cryptoasset Businesses must assess the Money Laundering, Terrorist Financing and Proliferate Financing risks, to decide on requesting the basic Travel Rule data from its customer.
On top of that, in the case of incoming transactions over EUR 1000, the additional originator Travel Rule data required in transfers above the threshold may be requested from the beneficiary.
In higher-risk cases, firms should only allow the transfer if their customer can prove control over the wallet via appropriate solutions (e.g. Satoshi Test or cryptographic signature).
When do VASPs need to comply with the Travel Rule in the UK?
The Travel Rule is in effect in the United Kingdom from 1 September 2023 onwards.
Timeline
2019: The MLRs are amended to include cryptoasset businesses under obliged entities.
July 2021: The HM Treasury proposes a consultation on the amendments that would include the Travel Rule to cryptoassets in the MLRs.
June 2022: The HM Treasury publishes Responses to the Consultation.
21 July 2022: The MLRs are amended to include the cryptoasset transfer obligations (Travel Rule).
1 Sep 2023: The grace period for the Amendment is over. The Travel Rule is live in the UK.
What is the relevant Travel Rule information for VASPs in the UK?
The Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022
