Cryptocurrency is becoming increasingly popular, but so is its use for money laundering. The Financial Action Task Force (FATF) recently revealed the Travel Rule for crypto, but what does this mean?
Alessa, a RegTech focused on compliance and fraud management, has released a report exploring what AML professionals need to know to ensure crypto compliance.
The Travel Rule for crypto states that all crypto companies must screen, record and communicate the information of both sender and recipient for crypto transactions that exceed $1,000 or a certain amount designated by FATF member states.
This amount can differ by country. For example, in the US the crypto travel rule is required for any transaction about $3,000.
Once a transaction threshold is met, the virtual asset service provider (VASP) of the sender of the funds must send over personally identifiable information (PII) to the VASP of the recipient and vice versa.
Alessa also outlined some of the factor’s firms need to be aware of. It stated that virtual assets are defined by the FATF as digital representations of value that can be digitally traded or transferred and used as payment for investment. Virtual assets do not include digital representations of fiat currency, securities and other financial assets covered in other FATF Recommendations.
It next explained what are defined as VASPS. These are any natural or legal person who is not covered elsewhere under the Recommendations and as a business conducts one of a list of activities on behalf of another natural or legal person.
These activities include the exchange between virtual assets and fiat currencies, exchange between one or more forms of virtual assets, transfer of virtual assets, storing virtual assets and participation and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.
Finally, it explained what the required PII is. These are the legal names of the sender and recipient, their addresses and their account numbers.
Allessa concluded, “Being prepared for compliance with new regulations and currencies requires a modern compliance program with modern solutions. The frequency and difficulty in screening crypto transactions means that your compliance team needs effective transaction monitoring and screening solutions and sanctions screening solutions.”
Read the report here.
Copyright © 2022 RegTech Analyst
Copyright © 2018 RegTech Analyst