UK: The Cryptocurrency Industry Is Facing Major New Obligations In Order To Tackle Money Laundering

Syedur Rahman of business crime solicitors Rahman Ravelli outlines the importance of the recently-introduced requirements and the challenges facing those who have to meet them.

The cryptocurrency industry is having to comply with new anti-money-laundering standards that require exchanges and other firms to share customer information.

Standards adopted by the intergovernmental anti-money laundering organisation the Financial Action Task Force (FATF) require cryptocurrency exchanges, some digital wallet providers and other firms to send customer data to institutions receiving transfers of digital funds, similar to a bank wire transfer.

Yet some in the cryptocurrency industry say that the infrastructure is not in place to send such data. They have also voiced concerns about how this system should be run and financed in such a decentralised sector of business.

Under the FATF guidelines, which were adopted in June, cryptocurrency firms must transmit customer data to other financial institutions when transferring $1,000 or more. The FATF guidelines are intended to prevent regulatory arbitrage – the practice of taking advantage of a price difference between two or more markets – and persuade countries to strengthen their cryptocurrency regulations. They are also seen as a vital tool in providing an audit trail that could be followed in the wake of a terrorist incident and in helping implement targeted sanctions.

But such measures will only be effective if and when the cryptocurrency industry devises and implements a method of sending and receiving customer data in a safe and standardised way. Regulation of cryptocurrency will not be effective unless countries worldwide are involved in setting up a cryptocurrency system which will help comply with FATF standards.

When that has been established, the FATF will then have to consider how it can ensure consistent monitoring in order to assess how the cryptocurrency sector in each country is complying with the guidelines.

Related read: Cryptocurrency – Reducing The Risks.

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By: Syedur Rahman

Post: UK: The Cryptocurrency Industry Is Facing Major New Obligations In Order To Tackle Money Laundering