FATF Travel Rule

What Is the FATF Travel Rule?

The FATF Travel Rule, introduced in 2019, is a regulatory guidance update to Recommendation 16 of the Financial Action Task Force (FATF) Standards. It aims to address concerns related to money laundering and terrorist financing in cryptocurrencies and virtual assets (AML/CFT).

Enhancing AML Measures

The FATF Travel Rule draws inspiration from the United States’ Banking Secrecy Act (BSA) and requires countries to ensure that their domestic virtual asset service providers (VASPs).

Crypto exchanges and custodial platforms, have the necessary mechanisms in place to facilitate the sharing of personal information with counterparty VASPs during transactions exceeding 1,000 USD.

FATF Travel Rule

The purpose of this rule is to enable government agencies to access data from users engaged in financial transactions above the specified threshold.

The information collected typically includes the user’s name, account number, and details of the accounts involved in the transaction.

Additionally, there are requirements for proof of address, identity, date of birth, place of birth, and other relevant details.

Under the FATF Travel Rule, VASPs and other financial institutions must share information, particularly for transactions that meet the rule’s threshold.

They are also responsible for ensuring the accuracy and currency of the information they provide to other participants.

The FATF Travel Rule broadly defines any financial institution or cryptocurrency company as a Virtual Asset Service Provider (VASP).