The UK government has revealed it is planning to scale back its requirements for gathering data from both the senders and recipients of crypto sent to unhosted wallets.
According to Coin Telegraph, the government will scale back the requirements unless the transaction poses ‘an elevated risk of illicit finance’. The government also said that unhosted wallets could be used for a variety of legitimate purposes.
A report by the HM Treasury said, “There is not good evidence that unhosted wallets present a disproportionate risk of being used in illicit finance. Nevertheless, the government is conscious that completely exempting unhosted wallets from the Travel Rule could create an incentive for criminals to use them to evade controls.”
The UK government has made the change in response to a consultation that was held between July and October last year with AML, CTF, industry, academia and civil society groups. This consultation saw many concerns expressed around the ‘breadth of personal information collected’ around transfers to unhosted wallets as well as the time required to enact such policy.
The Treasury said the amendments will have a one-year grace period, taking effect in September 2023 in approved by Parliament. The Treasury also hinted it would implement the changes in accordance with the Financial Action Task Force’s Travel Rule, which sets out recommendations for regulators aimed at having cryptocurrency transactions comply with CFT and AML regulations.
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