UK changes KYC rules
The UK government has withdrawn its plan to collect data on transactions sent to private or unhosted crypto wallets.
Treasury revels in AML/CFT consultation report good where it said it would not implement the proposed data collection. It said the feedback received after the announcement of a July 2021 document informed the proposed rule of its decision.
The Treasury issued a document in July 2021 seeking to compel crypto firms and individuals to collect the personal data of transacting parties. The move was to prevent illegal transactions and enforce KYC in crypto-asset transfers.
“Cryptoasset firms will need to put in place systems to ensure that personal information of the originator and beneficiary of cryptoasset transfers is transmitted and received in an appropriate format simultaneously with the transfer,” the Treasury said in the document.
The proposed rule would require crypto exchanges and users to collect data on any transactions between unhosted parties.
However, in a recently released document, the Treasury clarified that it will not go ahead with the proposal.
In the document the Treasury stated: “Instead of requiring the collection of beneficiary and originator information for all unhosted wallet transfers, cryptoasset businesses may be required to collect this information only for transactions identified as having a high risk of illicit finance.” would be expected.”
Despite the change, the new rule only transfers the burden of collecting personal information data to the cryptoasset firm that facilitates transactions. In addition, firms have to collect data for “transactions identified as having high risk of illicit finance”.
Further, where the firm cannot verify the identity of the beneficiary or sender, it has the discretion to reject, suspend or allow the transaction.
This rule is a UK effort to implement AML/CFT standards under the Financial Action Task Force (FATF).
Under the FATF, disclosure of the identities of transacting parties is part of the AML/CFT standards. This informed the Treasury’s prior decision to force data collection “regardless of the technology used to facilitate the transfer”.
As it stands, only crypto institutions that facilitate such transfers collect personal data.
UK changes KYC rules