FATF Travel Rule

FATF Travel Rule Key Points

• The FATF Travel Rule is a regulatory measure that requires Virtual Asset Service Providers (VASPs) to collect and transfer customer data during transactions.
• The rule was issued by the Financial Action Task Force (FATF), an international financial watchdog.
• The rule is aimed at preventing money laundering and terrorist financing.
• The travel rule applies to all transactions that exceed $1,000 or €1,000.
• Non-compliance with the FATF Travel Rule can lead to penalties or sanctions.

FATF Travel Rule Definition

The FATF Travel Rule is a regulation issued by the Financial Action Task Force (FATF) requiring Virtual Asset Service Providers (VASPs), such as cryptocurrency exchanges, to collect and share customer information during transactions. The rule is aimed at enhancing transparency, promoting accountability, and combating money laundering and terrorist financing in virtual asset transactions.

What is the FATF Travel Rule?

The FATF Travel Rule is a regulation that imposes an obligation on Virtual Asset Service Providers (VASPs) to collect and exchange personal information during transactions.
This information includes the names, account numbers, and location data of the sender and recipient, and must be shared and stored for each transaction.
The rule is designed to increase transparency in virtual asset transactions and reduce the risk of financial crimes such as money laundering and terrorist financing.

Who Does the FATF Travel Rule Apply To?

The FATF Travel Rule applies to all Virtual Asset Service Providers (VASPs), which include cryptocurrency exchanges, custodial wallet providers, and any other businesses involved in the transfer, exchange, or safekeeping of virtual assets.
The rule also applies to any transaction involving virtual assets that exceeds $1,000 or €1,000.

When Was the FATF Travel Rule Introduced?

The FATF Travel Rule was introduced in June 2019, during the FATF plenary session.
It was implemented as part of the FATF’s updated guidance on virtual assets and their service providers.

Where Is the FATF Travel Rule Applicable?

The FATF Travel Rule is applicable globally, as the FATF is an international body.
The FATF has 39 members, including all major economies, and its recommendations are followed by over 200 countries and jurisdictions.

Why Was the FATF Travel Rule Introduced?

The FATF Travel Rule was introduced to address the risks associated with virtual assets, particularly the potential for money laundering and terrorist financing.
The rule aims to increase transparency and accountability in virtual asset transactions, making it more difficult for criminals to use these platforms for illicit activities.

How Does the FATF Travel Rule Work?

Under the FATF Travel Rule, when a customer initiates a virtual asset transfer that exceeds the set threshold, the VASP must collect and share specific information with the recipient’s VASP.
This information includes the sender’s name, account number, physical address, national identity number, and date and place of birth, as well as the recipient’s name and account number.
The rule requires both VASPs to keep this information for a period of five years.