The Financial Action Task Force (FATF) published its travel rule last June, in which it proposed a means through which cryptocurrency exchanges and other asset custodians could operate while also staying in compliance with existing Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.
In that time, several countries have taken different paths towards regulating the crypto space concerning information control and user identity.
When the FATF proposed the travel rule, it explained in an accompanying press release that it would be giving its member countries a maximum of a year to ensure full compliance and get their native crypto industries in line. Now that the deadline seems to be up, several countries have done their bit to adopt progressive rules concerning the agency’s requests.
Compliance is Strong in the U.S.
In the United States, the Bank Secrecy Act forms the basis of AML regulations. Financial institutions have complied with the regulation for decades, but in 2013, the Financial Crimes Enforcement Network (FinCEN) demanded that cryptocurrency companies should be made to ensure full compliance as well. The agency also enacted its BSA travel rule for crypto companies last year, issuing its guidelines to digital asset service providers.
Earlier this week, Steve Mnuchin, the Secretary of the United States Treasury, announced at a hearing with the Senate Committee on Financial Services that the FinCEN is also working on developing cryptocurrency laws. As he explained to the Committee, the agency has seen the rapid rise in crypto use, and while they recognize the fact that the technology is innovative, they would also work to ensure that these assets don’t end up being used like Swiss bank accounts.
Uneven Compliance Across Europe
The European Union is a bit of a different case. As an economic bloc, the Union has accepted that the cryptocurrency space needs to be effectively regulated, and it has adopted the FATF travel rule completely. Then, the stakes were even higher for crypto companies in the EU when the block adopted the Fifth Anti-Money Laundering Directive (AMLD5).
The AMLD5 isn’t as stringent as the FATF’s travel rule, but it does put some significant responsibilities on crypto firms in the EU. The most significant of these responsibilities has been about customer record-keeping, a decision that has led to the mass exodus of cryptocurrency firms in the region.
Regardless, the AMLD5 came into full effect on January 10, and several crypto companies in the EU have still committed to fighting it. There’s also the issue of the United Kingdom, which left the EU earlier this year. While it complied with the regulations up until its exit, there hasn’t been any word on whether that will continue.
Countries On the Way to Compliance
Switzerland, which is seen by many as the most crypto-friendly nation, also recently made amendments to its Payment Services Act to comply with the FATF’s rules. Last week, the Swiss Financial Market Supervisory Authority reduced the threshold for unidentified crypto exchanges from 5,000 CHF ($5,000) to 1,000 CHF ($1,000). It’s expected that other components of the Act could also be amended likewise.
Singapore is also working on falling in line. In December, the Monetary Authority of Singapore confirmed that it “intends to amend the PS Act to fully align with the most recent enhancements to the FATF Standards.”