The FATF Crypto Travel Rule requires crypto companies to obtain “the required and accurate originator and beneficiary information” and pass it on to other counterparty VASPs or financial institutions before or during the transaction of virtual assets. It further recommends that countries apply the rule for transfers greater than 1,000 USD/EUR.
What is the travel rule?
The Travel Rule was initially introduced by the Financial Crimes Enforcement Network (FinCEN) as part of funds transfer rules under the U.S. Bank Secrecy Act on May 28, 1996. Itrequired financial institutions to pass on specific information to the next institution in certain funds transmittals involving more than one institution.
What does the new travel rule mean for cryptocurrencies?
The new information collection rules will mean that financial authorities are better able to detect and prevent money laundering activities involving cryptocurrency and will also help deter criminals by reducing the number of VASPs through which they can move funds. What are the challenges to implementing the Travel Rule?
How does the travel rule affect cryptoasset exchanges and custodian wallet providers?
The Travel Rule creates significant practical compliance challenges for cryptoasset exchanges and custodian wallet providers, particularly as the information required to complete a transfer of cryptoassets is insufficient to comply with the Travel Rule.
