Travel Rule Implementation
The Travel Rule is a regulatory requirement for Operators in the EU.
More Travel Rule Articles
What is the Travel Rule?
The Travel Rule is a regulatory requirement designed to prevent money laundering and terrorist financing, particularly in the financial and cryptocurrency industries. It comes from the Financial Action Task Force (FATF) guidelines. FATF is an international organization created to combat money laundering, terrorist financing, and other threats to the integrity of the global financial system.
The intent of the Travel Rule is to deter companies and other institutions from blindly participating in money laundering operations.
The Travel Rule mandates that certain information about the sender and receiver of a transaction "travels" with the transaction itself when money (or value) is transferred between financial institutions or Virtual Asset Service Providers (VASPs, also CASPs: Crypto-Asset Service Providers).
The intent of the Travel Rule is to retain Sender and Recipient details for every transaction and exchange such information between VASPs when certain threshold for transaction value is reached.
For transactions over a certain threshold (often $1,000 or €1,000, but this depends on local regulations), the following details are typically required:
Sender (customer) Information, including: full name, wallet address, and a physical address, national ID number, or date of birth and place of birth other identifying information. The Travel Rule now forces you to disclose and attach it to the transaction so that it may be examined by any authorized party (typically a regulator) later in time.
Receiver Information, including: name & wallet address. If you haven’t already implement strict KYC, then the Travel Rule now forces the matter in the EU. To comply with the Travel Rule, you must now (at least) collect your Receiver's Name.
Glossary
The Travel Rule introduces some new terms and acronyms. Here’s a quick reference:
Term | Description |
|---|---|
VASP | Virtual Asset Service Providers Cryptocurrency Exchange, Custodial Wallet , Crypto ATM Operator …. VASPs may be regulated or unregulated. |
CASP | Crypto Asset Service Providers VASP, but defined in the specific legal context of the EU regulations. |
Originator | The entity that transmits coin in the specific transaction. |
Beneficiary | The entity that receives the transmitted coin in the specific transaction. |
PII | Personally Identifiable Information Information about the Originator, Beneficiary and the transaction.
|
Envelope | Same as PII in the context of CAS. |
Travel Rule Provider | A third-party that enables the authorized transfers of TR PIIs (envelopes) between VASPs within their network. |
Originator VASP | The VASP that is sending coin on the behalf of their customer. |
Beneficiary VASP | The VASP that is receiving coin on the behalf of their customer. |
Hosted wallet | Cryptocurrency wallet where the private keys are held by a VASP. |
Custodial wallet | Same as Hosted Wallet. |
Self-hosted wallet | Cryptocurrency wallet where the private keys are held by the customer/individual. For example: the customer controls his own wallet on his computer or phone where the keys are on the device. |
Unhosted wallet | Same as Self-hosted wallet. |
Related Articles:
EU Specific TR Details and Instructions
Please familiarize yourself with the Travel Rule concepts.
Travel Rule basic concepts (and abbreviations) described here:
Travel Rule: BUY
This article describes the Travel Rule for BUY process. This process is shared between all providers, but the implementation might differ between providers.
The Travel Rule mandates that certain information about the sender and receiver of a transaction "travels" with the transaction itself when money (or value) is transferred between financial institutions or Virtual Asset Service Providers.
Travel Rule: SELL
Implementing the Travel Rule for SELL transactions requires 2 timelines to simultaneously transition the legacy transaction record and the travel rule transfer (together).
The flow requires you (the Operator) to determine the wallet type (custodial vs unhosted) in advance with your customer.
Wallets of type “
UNKNOWN"are automatically rejected when using the Travel Rule.
TR Custodial Compliance
This article explains how to handle Custodial Compliance, with an example using Notabene.
More information about the Travel Rule: Travel Rule Implementation
Currently, the Travel Rule is only required for Operators in the EU.
TR Self Declaration
Released in CAS version 20241231
Self-declaration enables your customers to transact (within a regional monetary limit) under the customer’s assertion that the customer’s wallet qualifies under the Travel Rule.
The customer, at the time of the transaction, asserts/declares that their wallet complies.
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