UK FATF Recommendation No. 16 new regulations come into effect today. Are you ready?

Author: Casey Wagner, Blockworks; Compiler: Songxue, Jinse Finance

** New information reporting requirements for cryptocurrency transactions in the United Kingdom will come into effect on Friday, but will have limited effect if other countries do not join, international regulators said. **

According to FATF data, the UK is one of 62 jurisdictions among more than 200 international Financial Action Task Force (FATF) jurisdictions that have or are planning to update their “travel rules” to include digital assets. in.

**Under new rules known as FATF Recommendation 16, virtual asset service providers and financial institutions must collect and share personal data involved in certain cryptocurrency transfers. **

In the UK, FATF Recommendation No. 16** will come into effect on September 1**,** institutions will be required to collect and report data involving UK individuals involved in digital asset transfers exceeding £1,000. **

Includes the originator's name, address, account/transaction identifier, personal identification number and customer identification number or data, location and birth information. Agencies must also report the recipient's name and account number.

The FATF has publicly expressed its dismay at jurisdictions that have failed to act to enforce the travel rule, noting that differing international standards make the goals of these schemes — combating money laundering — more difficult.

"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 wrote in a June 2023 report on the current status of implementation. "FATF urges Jurisdictions are making immediate progress in enacting and enforcing legislation implementing the Travel Rule."

Additionally, even among countries that have agreed to comply, policies vary, making it difficult for companies to meet the requirements. In the United States, the transaction threshold is $3,000, and in Canada, institutions must also record the name and address of the beneficiary of the transaction.

Lawyers at international law firm Clifford Chance said that differences aside, meeting general information reporting requirements would be very difficult across the UK. **

“The crypto-asset service provider cannot identify from the wallet address whether the counterparty to the crypto-asset transfer is an individual or another crypto-asset service provider and cannot identify the location of the sender’s wallet,” a recent report from the law firm reads . “This challenge is compounded by the fact that the transaction originator, who may be a client of the cryptoasset service provider, may not have this information.”

The law firm noted in the report that the rules also do not take into account non-custodial wallets, which would not be subject to reporting requirements. **

The lawyer added: “This is an interesting approach given the increased risk of money laundering associated with moving to a non-custodial wallet.”