The FATF Travel Rule, also known as Recommendation 16, was released by the Financial Action Task Force (FATF), an organization that develops policies to prevent money laundering and block terrorist financing. The rule requires financial institutions and cryptocurrency companies, known as Virtual Asset Service Providers (VASPs), to collect personal data on participants exceeding 1,000 USD/EUR in transaction value. It also recommends countries to ensure that VASPs share information of the originator and the beneficiary to their counterparties.

While VASP-to-VASP transfers are currently the only transfers covered by the FATF Recommendation, VASPs include crypto exchanges, digital wallet providers, and those who participate in the provision of financial services relating to an issuer’s offer or sale of virtual assets. Decentralized Exchanges (DEX) and Decentralized Finance (DeFi) platforms are also considered VASPs.

The FATF Travel Rule implementation is essential in identifying and preventing payments to sanctioned individuals, entities, countries, and wallet addresses, blocking terrorist financing, detecting suspicious users, preventing money laundering, and avoiding fraud.

The recent update on the Travel Rule implementation was discussed in the FATF plenary meeting that happened from 14 to 17 June 2022. The EU has also made public the proposal for the Transfer of Funds Regulation (TFR), which aims to become the legislative package that will require crypto asset service providers (CASPs) to support each transfer of funds with the originators’ and beneficiaries’ information.

VASPs and CASPs are struggling to understand how to fully comply with the FATF Travel Rule even with the help of available blockchain analytic tools as of now. At VAF Compliance, we analyse and summarize the currently available information from these various blockchain analytic tools.

Our reports include certain data that can be used to fulfil your institution’s travel rule requirements. With the recent updates on the Travel Rule, it is crucial for VASPs and CASPs to be vigilant in their compliance efforts to prevent financial crime and ensure the safety of their users.