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Key Insights from CryptoUK’s Travel Rule Good Practices Guide

Catarina Veloso
Catarina Veloso
June 5, 2024
Catarina, Regulatory & Compliance Senior Associate at Notabene, specializes in global crypto regulations. With roles including co-chair of the CryptoUK Travel Rule group and part of the EBA Expert Group, she shapes Travel Rule compliance. Holds Masters in Energy Law and BA in Law.

Authored by CryptoUK’s Travel Rule Working Group, the Travel Rule Good Practices Guide is a cornerstone document for virtual asset service providers (VASPs), cryptoasset businesses, and digital asset industry participants navigating the regulatory landscape in the UK.

This comprehensive guide is a culmination of the industry’s collective effort. It provides an in-depth overview of compliance strategies and valuable guidance on addressing associated challenges.

The UK’s Pivotal Role in the Travel Rule Compliance Landscape

According to Chainalysis (2023), the UK ranks third globally in transaction volume, with an estimated $252.1 billion received last year. The 44 VASPs currently registered with the FCA must comply with the Travel Rule, which came into force on September 1, 2023. This situation underscores the UK’s significant role in promoting Travel Rule compliance worldwide.

Insights from the 2024 State of Crypto Travel Rule Compliance Report

The UK, with its robust regulatory framework, leads in compliance rates. Our comprehensive State of Crypto Travel Rule Compliance Report 2024 revealed that the UK boasts a 100% compliance rate among surveyed respondents in the EMEA region, reflecting the country’s stringent standards since the rule’s enforcement.

The 2024 State of Crypto Travel Rule Compliance Report, page 62.
The 2024 State of Crypto Travel Rule Compliance Report, page 62.

Notabene’s Proactive Role in UK Travel Rule Compliance

Our team at Notabene is dedicated to assisting UK VASPs in understanding and complying with their Travel Rule obligations. In 2023, we spearheaded several initiatives:

  • Regulatory Sandbox Testnets: As part of the Financial Conduct Authority's (FCA) regulatory sandbox, we conducted two testnets with firms such as Ramp, Bitstamp, Wirex, CoinPass, Altalix, Hidden Road, Bitpanda, Custody, Uphold, and Zodia Markets.
  • Guidance Publication: We published a concise guide summarizing the Travel Rule obligations outlined in the Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 (MLTFR 2022.)

Additionally, Notabene has actively engaged in the JMLSG consultation process, submitting a response to contribute to the development of practical and effective compliance strategies for the industry. Our efforts ensure the guidance remains relevant and supports VASPs’ compliance journey.

Key Insights from the Travel Rule Good Practices Guide

The CryptoUK Travel Rule Good Practices Guide is an invaluable resource for navigating the complexities of regulatory compliance in the crypto industry. With contributions from industry experts, this guide provides a clear path for VASPs to achieve and maintain compliance.

Key areas covered include:

  • Counterparty VASP Due Diligence: In the absence of regulatory guidelines in this respect, this chapter outlines key considerations and best practices, featuring key insights shared by Notabene’s Head of Regulatory and Compliance Team, Lana Schwartzman.
  • Withdrawal and Deposit Flows: Provides an overview of applicable obligations and approaches for operationalizing Travel Rule compliance within withdrawal and deposit flows.
  • Unhosted Wallets: Discusses the regulatory framework, associated risks, and potential mitigations.

About the Working Group

The CryptoUK Travel Rule Working Group was established in 2023 to foster knowledge sharing and best practices. 

The group collaborates with policymakers, regulators, and key stakeholders, including HM Treasury, the FCA, the Electronic Money Association, and the JMLSG. The Working Group significantly contributed to the development of the JMLSG’s Guidance on Cryptoasset Transfers, published in August 2023.

For more insights and to stay informed about regulatory developments, download the guide and join the CryptoUK Travel Rule Working Group today.