<a href="https://medium.com/goaver/the-travel-rule-and-cryptocurrency-meet-24464a6d6863">https://medium.com/goaver/the-travel-rule-and-cryptocurrency-meet-24464a6d6863</a>The Financial Action Task Force (FATF) was established in 1989 by Group of Seven (G-7) as a global authority to regulate Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). FATF consists of<a href="https://www.fatf-gafi.org/about/membersandobservers/"> 39 member countries</a> who currently preside over more than 200 countries and almost every major global financial center. FATF also works closely with 8 regional associate members and 30 observer countries and organizations (e.g., IMF, UN, World Bank).In June 2019, the <a href="https://kyc-chain.com/what-is-the-financial-action-task-force-fatf/">FATF</a> revised their <a href="https://www.fatf-gafi.org/media/fatf/documents/recommendations/RBA-VA-VASPs.pdf">Recommendation 16 (Travel Rule)</a>, which fundamentally changes the original crypto world that we are familiar with. With the revision, the proposal has been extended to Virtual Asset Service Providers (VASPs) such as virtual assets and exchanges, with huge implications. The FATF publishes non-compliant countries and periodically publishes reports on member countries' compliance with the FATF recommendations. <a href="https://cointelegraph.com/news/fatf-aml-regulation-can-the-crypto-industry-adapt-to-the-travel-rule">The due date of Travel Rule compliance is June 2020.</a><h1>What is Travel Rule?</h1><a href="https://www.fatf-gafi.org/publications/fatfrecommendations/documents/guidance-rba-virtual-assets.html">Recommendation 16</a> is commonly referred to as the “Travel Rule,” and was designed to regulate the potential risk for money laundering or terrorist financing in wire transfers. The Travel Rule was previously limited to banks only, and closely mimics the Bank Secrecy Act (BSA) in the United States which requires financial institutions to share information about their customers and assume responsibility for reporting suspicious activity.Prior to the implementation of the FATF, the cryptocurrency industry was largely self-regulated. <a href="https://kyc-chain.com/cryptocurrency-regulations-around-the-world/">Each country created its own rules</a> to prevent money laundering and terrorist financing, but there was a lot of confusion and no overarching international standard, To keep up with the evolving world of cryptocurrencies, Recommendation 16 was expanded to include virtual assets and exchanges in June 2019.Expanded to include VASPsUnder the Travel Rule, VASPs are required to share the identities of users involved with any virtual asset transfers valuing $1000 USD or more.Countries should ensure that originating VASPs obtain and hold required and accurate originator information and required beneficiary information on virtual asset transfers, submit the above information to beneficiary VASPs and counterparts (if any), and make it available on request to appropriate authorities.VASPs will now need to obtain and verify customer identification with one another. The originator’s VASP should share the data listed blow with the beneficiary’s VASP during transactions:1 Name of the originator and beneficiary2 Account number used for transaction processing3 Identifiable information, such as physical address, ID number or place and date of birth.4 Share &nbsp;blacklists with other VASP and related parties.In addition, VASP should also be licensed or registered in the jurisdictions and have ongoing monitoring of transactions.We can examine whether a VASP should comply with the FATF regulations by questioning the following conditions:1 Whether it is a centralized virtual currency exchange.2 Whether it is a centralized virtual currency hosting service.3 Whether it allows for the transfer of virtual currency.4 Whether it provides custodian, investor, or issuer related services.If the answer to any of these questions is “yes,” then VASP should consider a risk-based, proactive approach to compliance:<ul><li>Develop a risk-based program tailored to the specific business</li><li>Implement Know Your Customer (KYC) and Enhanced Due Diligence (EDD) processes</li><li>Implement transaction monitoring and customer risk scoring</li><li>Implement dynamic systems to ensure compliance with sanctions laws</li><li>Establish clear communication with clients regarding prohibited activities</li><li>Record detailed suspicious transaction reports (STRs) where possible</li></ul>Relationship between Travel Rule and KYCThe main difference between Travel Rule and KYC is that the data collected during KYC is only used by the organization that collected the data, whereas under Travel Rule, KYC information needs to be shared between VASPs and/or relevant authorities. Moreover, KYC is an internal process, while Travel Rule is an external process.<h1>Opportunities and Challenges</h1>The Travel Rule will bring both positive and negative effects, with one major benefit being the reduction of financial crime in the cryptocurrency industry. Under the Travel Rule, financial crimes will be more difficult to commit and regulators will have a better understanding of how criminals use cryptocurrency.Another benefit is that the Travel Rule will lead to stronger KYC policies and practices, which in turn will increase customer confidence in VASPs. As a result, the implementation of Travel Rule may actually attract to new users to the crypto world who believe that the industry is now better regulated and therefore safer.However, with Travel Rule, cryptocurrency will be no longer anonymous, which is part of the reason it became so popular in the first place. It is possible that the use of VASP has declined due to the impact of Travel Rule. Although many people have heard of cryptocurrencies, <a href="https://cointelegraph.com/news/19-of-world-population-bought-crypto-before-2019-kaspersky-report">only 10% of people</a> actually fully understand <a href="https://cointelegraph.com/news/19-of-world-population-bought-crypto-before-2019-kaspersky-report">how they work.</a>&nbsp;On top of that, not all cryptocurrencies and VASPs use the same blockchain or even the same technology. For example, the two most popular cryptocurrencies, Bitcoin and Ethereum, run on <a href="https://www.investopedia.com/articles/investing/031416/bitcoin-vs-ethereum-driven-different-purposes.asp">completely different block chains</a>, which poses a huge problem for interoperability. It is conjectured that compliance with the Travel Rule would require overall uniformity of certain types in the crypto world, which would lead us to another problem.&nbsp;Furthermore, the government needs to develop regulations related to the registration of VASPs and the submission of Travel Rule reports. After all, cryptocurrency is not tied to any government, country, or legal tender.Then there are the interoperability issues involving cultural, language, and regional barriers. The need for a global solution means that VASPs in the US and VASPs in Japan must be able to use the same system. VASPs from all over the world will need to come together, work towards a common goal, and agree on a solution. When you consider it difficult for all countries around the world to reach consensus on anything, you will see a huge obstacle for VASPs.Compliance with the Travel Rule also requires compliance with existing personal data privacy laws, such as the <a href="https://kyc-chain.com/are-you-gdpr-compliant-heres-what-to-do/">GDPR</a> and <a href="https://kyc-chain.com/what-is-the-california-consumer-privacy-act/">CCPA</a>, which presents a further set of challenges.<a href="https://cointelegraph.com/news/not-everyone-is-happy-but-we-have-to-move-on-some-challenges-to-the-fatfs-new-guidance">In interviews during the V20 event in June 2019,</a> VASPs proposed some problems and challenges which both originators’ and beneficiaries’ VASP will have to find a way to share data with counterparties while not violating privacy laws or creating unreliable data through tampering.Travel Rule represents a major change in virtual currency that will fundamentally alter the way VASPs operate in the future. Besides, cooperation between VASPs will be a key part of day-to-day operations. It will be crucial for the virtual currency ecosystem and community to come together and do their best to comply with regulations.References<ul><li><a href="https://complyadvantage.com/knowledgebase/fatf-recommendations/">FATF Recommendations — What You Need To Know</a></li><li><a href="https://complyadvantage.com/knowledgebase/fatf-travel-rule/">FATF Travel Rule: What You Need To Know| ComplyAdvantage</a></li><li><a href="https://www.sygna.io/zh-hant/blog/what-is-fatf-recommendation-16-for-vasps/">What is the FATF Recommendation 16 Travel Rule for VASPs? — Sygna</a></li><li><a href="https://blog.chainalysis.com/reports/fatf-regulatory-guidance-is-here">Chainalysis Blog | FATF Regulatory Guidance Is Here. Now What?</a></li></ul>

The Financial Action Task Force (FATF) was established in 1989 by Group of Seven (G-7) as a global authority to regulate Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). FATF consists of 39 members who currently preside over more than 200 countries and almost every major global financial center. FATF also works closely with 8 regional associate members and 30 observer countries and organizations (e.g., IMF, UN, World Bank).

How to regulate virtual assets? –about FATF Travel Rule recommendations

The '25 Roadmap Preview: December 18, 2024

“The King of Tron” Update: December 4, 2024

Biweekly Update: November 20, 2024

The 'Pulse' Update: November 6, 2024

In-Depth Technical Analysis: Why Choose a Mature Crypto Wallet Service Instead of Building Your Own

Five Stages of Evolution for Crypto Wallets

Biweekly Update: October 23, 2024

Biweekly Update: October 09, 2024

Biweekly Update: September 25, 2024

Send Via Link campaign and "Gimme more wallets" Update :  September 11, 2024

The “Send Crypto via Link” Update: August 28, 2024

KryptoGO's Award-Winning Innovations at ZK Hack Montreal, ETHDenver, and ETHTaipei

Stake Your Stables! Biweekly update: August 14, 2024

The “Not Just A Wallet” Update: July 31, 2024

Biweekly Dev Update: July 17, 2024

Biweekly Dev Update: July 3, 2024

Biweekly Dev Update: June 5, 2024

Challenges and Solutions for Using Cryptocurrency in Business Operations

Biweekly Dev Update: May 22, 2024

Biweekly Dev Update: May 8th, 2024

Biweekly Dev Update: April 17th, 2024

Biweekly Dev Update: April 3rd, 2024

Biweekly Dev Update: March 20th, 2024

Making Sense of Decentralized Wallets: EOA and Smart Contract Explained

Biweekly Dev Update: March 6th, 2024

Centralized vs. Decentralized: The Ultimate Guide to Choosing the Right Crypto Wallet for Your Business

Navigating Compliance in Taiwan's Cryptocurrency Market: From Fraud Prevention to Enhanced Regulation

【Kind Reminder】Please be vigilant against scams. KryptoGO will never proactively ask you to make investment transactions.

Biweekly Dev Update: February 21th, 2024

Biweekly Dev Update: February 7th, 2024

Web3 Business Operations: Future Trend or Current Necessity?

Biweekly Dev Update: January 24th, 2024

Biweekly Dev Update: January 10th, 2024

Biweekly Dev Update: December 27th, 2023

Biweekly Dev Update: December 13th, 2023

Biweekly Dev Update, November 29th, 2023

Biweekly Dev Update, November 15, 2023

Biweekly Dev Update: November 1st, 2023

Biweekly Dev Update: October 19th, 2023

Biweekly Dev Update: Oct 4th, 2023

The Chatroom and Social Update: September 20th, 2023

Play-to-Earn vs. Blockchain Gaming: Rediscovering the Joy of Play

Product Launch Update: September 6th, 2023

KryptoGO Launches AI-Powered One-Stop Web3 Cloud Solution

Biweekly Update: August 23rd, 2023

The Keyless Wallet Update: August 9th, 2023

Biweekly Update: July 26th, 2023

Biweekly Update: July 12th, 2023

Biweekly Dev Update: June 7th, 2023

Unlock the Future: Passkey + DID + FIDO - Exploring the Next Generation of Digital Wallets and Identities

Biweekly Dev Update: May 24th, 2023

Biweekly Dev Update: May 10th, 2023

Biweekly Dev Update: April 26th, 2023

KryptoGO team wins three ETHGlobal Tokyo Hackathon Awards! Join hands with YGG Japan and IVC to lay out GamiFi industry

Biweekly Dev Update: April 12th, 2023

Help enterprises enter the Web3 world painlessly! What is WaaS?

Biweekly Dev Update: March 22th, 2023

How Much Does It Cost to Develop a Cryptocurrency Wallet on Blockchain?

How to Navigate the Metaverse: A Guide to 7 Different Types of Crypto Wallets

Virtual asset transaction service KYC, AML demand increased! KryptoGO Compliance work with Gaia Information  pioneered regulatory investigation engine

Biweekly Dev Update: March 8th, 2023

DeFi and KYC: Conflict or Coexistence?

Biweekly Dev Update: February 22nd, 2023

KryptoGO Wallet Updates: Supports Ronin chain, Personal Profile, Wallet Connect 2.0

Biweekly Dev Update: February 8th, 2023

Biweekly Dev Update: January 18th, 2023

Coinbase, the most compliant exchange, has been fined $100 million by the government and given a deadline to fix it.

Biweekly Dev Update: January 4th, 2023

Biweekly Dev Update: December 21, 2022

Biweekly Dev Update: December 7th, 2022

Biweekly Dev Update: November 23rd, 2022

Why can't you get your crypto assets back when the FTX exchange collapses? – Not Your Key, Not Your Coin

Biweekly Dev Update: November 9th, 2022

Biweekly Dev Update: October 26th, 2022

Biweekly Dev Update: October 12th, 2022

Biweekly Dev Update: September 28th, 2022

Things you should know about financial security in the Web3 era: How does token, private key, and wallet (account) work?

Collaboration for Web3 Game Wallets: YGG Japan, KryptoGO, and IVC Join Forces

Biweekly Dev Update: September 14th, 2022

Wanting to issue NFT but is complained about the difficult procedure? —Find out what the marketing pain points are from the “distribution process”

Biweekly Dev Update: August 31th, 2022

Crypto Wallets: Custodial vs. Non-Custodial Wallets

All You Need to Know About VASP FATF

Biweekly Dev Update: August 17th, 2022

Taiwan-based KryptoGO Secures US$3M in Seed Funding

Biweekly Dev Update: August 3rd, 2022

FATF Methodology with the Rapid Development of Virtual Assets 

Different transaction monitoring mechanism between Fiat and Crypto

Biweekly Dev Update: July 20th, 2022

The difference between KYC & AML?

Always being a concern in the bank? Get to know “KYC” in 5 minutes

Biweekly Dev Update: July 6th, 2022

test 123123

Biweekly Dev Update — 20220622

Biweekly Dev Update — 20220608

Biweekly Dev Update — 20220525

3 NFT Tools Help You Manage NFT Assets More Efficiently

Checking the Security of a Crypto Wallet - Taking KryptoGO Wallet as an example

The key to bringing down the traditional application wall - Web3's Seed Phrase / Mnemonic

How to regulate virtual assets? –about FATF Travel Rule recommendations

Recommend Articles

Hot Articles

Hot Tags