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The U.K makes a turnaround on KYC rule

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The UK government has abandoned its plan to collect data on transactions sent to a private or non-hosted crypto wallet.

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Ministry of Finance makes revelation during AML/CFT consultation report where he stated that he would not undertake the proposed data collection. It says the feedback received after the July 2021 paper announced the proposed rule influenced his decision.

Tracking crypto assets

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In July 2021, the Treasury released a document that sought to force crypto firms and individuals to collect the personal data of the parties to the transaction. This move was aimed at protecting against illegal transactions and implementing KYC when transferring crypto assets.

“Firms dealing with crypto assets will be required to implement systems that ensure the transfer and receipt of personal information of the sender and recipient of a crypto asset, along with a transfer in the appropriate format,” the document of the Ministry of Finance says.

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The proposed rule would require crypto exchanges and users to collect data on any transactions between non-hosted parties.

However, in a recently released document, the Finance Ministry clarified that it would not move forward with the proposal.

The document states: “Instead of requiring the collection of beneficiary and originator information for all unlisted wallet transfers, cryptoasset companies are expected to collect this information only for transactions that are identified as presenting an increased risk of illegal financing.”

Despite the changes, the new rule shifts the burden of collecting personal data only to the crypto asset firm that facilitates the transaction. In addition, firms must collect data on “transactions that have been determined to pose an increased risk of illicit funding.”

In addition, if the firm is unable to verify the identity of the beneficiary or sender, it may, at its sole discretion, reject, suspend or allow the transaction.

FATF compliance

The introduction of the rule is the UK’s attempt to implement AML/CFT standards under the Financial Action Task Force on Money Laundering (FATF).

Under the FATF, disclosure of information about the parties to a transaction is part of the AML/CFT standards. It informed the Treasury’s previous decision to force the collection of data “regardless of the technology used to facilitate transfers.”

Currently, only crypto institutions facilitating such transfers need to collect personal data.





Credit : cryptoslate.com

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