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Germany Enforces Crypto Travel Rule from October 1, 2021

Catarina Veloso
Catarina Veloso
September 29, 2021
Catarina, Regulatory & Compliance Senior Associate at Notabene, specializes in global crypto regulations. With roles including co-chair of the CryptoUK Travel Rule group and part of the EBA Expert Group, she shapes Travel Rule compliance. Holds Masters in Energy Law and BA in Law.

Today, Germany published the Crypto Asset Transfer Regulation - KryptoWTransferV, implementing FATF's travel rule in the country. We will review this in the next few days and update our Germany jurisdiction page.

Until then, we share the highlights:

1. The Crypto Travel Rule regulation comes into force in Germany on October 1st, 2021.

KryptoWTransferV § 7 (1) Entry into force, expiry:

"This Ordinance shall come into force on October 1, 2021."

2. The regulation subsumes to the preexisting Money Transfer Ordinance framework.

KryptoWTransferV § 3 (1): Duty to survey, Storage and transmission of data during transfers between crypto value service providers 

“For obliged entities making a transfer on behalf of the payer, the rules on obligations of the payment service provider of the payer under Articles 4 and 6 of the Funds Transfer Regulation shall apply mutatis mutandis if only crypto value service providers are involved in the transfer on behalf of the payer and the payee.

3. German VASPs must collect, store, and verify the name and addresses of non-custodial beneficiary and originators.

KryptoWTransferV § 4 (3): Duty to Collection and storage of data during transfers, in which not exclusively Crypto value service providers are involved

For the purposes of paragraphs 1 and 2, risk-adequate measures are measures which correspond to the identified money laundering and terrorist financing risk of the transfer and which ensure the traceability of the transfer. In particular, a risk-appropriate measure is the collection, storage and verification of the name and address of the beneficiary or the principal for whom no crypto service provider is acting in the transfer and who is not a contractual partner of the obliged party.”

4. Companies that are unable to comply immediately must notify competent supervisory authorities by November 30, 2021.

Companies that cannot comply immediately with travel rule obligations must notify competent supervisory authorities by November 30th, 2021. They must further include the reasons for the impediment, the measures taken to remove it, and the timeline for the removal by December 31st, 2021. The stated reasons will be subject to the assessment of the supervisory authority, who may decide whether or not an exemption period should be granted to the VASP.

KryptoWTransferV § 5 (1) Transitional provisions: 

“Obligated persons who, at the time of entry into force of this Ordinance, conduct banking transactions within the meaning of section 1(1) sentence 2 of the German Banking Act, provide financial services within the meaning of section 1(1a) sentence 2 of the German Banking Act or securities services within the meaning of section 2(2) to (4) of the German Securities Institutions Act in relation to crypto securities, and who are unable to comply with the obligations under sections 3 and 4 on a permanent basis or at all for reasons for which they are not responsible, shall notify the competent supervisory authority in accordance with section 50 number 1 of the German Money Laundering Act by 30 November 2021 and provide reasons for this by 31 December 2021. If obliged entities commence such banking transactions, financial services or investment services for the first time after the entry into force of this Ordinance, sentence 1 shall apply subject to the proviso that the notification, including the justification, must be made upon commencement. “

5. VASPs must ensure Travel Rule compliance within 12 months. 

Under certain circumstances, a single extension of this period for additional 12 months may be granted.

KryptoWTransferV § 5 (2) Transitional provisions: 

“The justification referred to in paragraph 1 shall include information on the reason for the impediment and on the measures taken to remove the impediment. In addition, the period of time in which the removal of the reason for the impediment is expected to take place shall be indicated, and it shall be specified which other risk-appropriate measures will be taken during the implementation of transfers. The period specified in accordance with the first sentence may not exceed twelve months. A single extension of this period by a further twelve months shall be permissible if a reasoned notice of extension is submitted before the expiry of the first twelve-month period and if the reason for the impediment continues to exist.”

Relevant links:

  • BaFIN | Banking Act (Kreditwesengesetz - KWG)
  • Bundesminister der Finanzen | Kryptowertetransferverordnung – KryptoWTransferV
  • The Federal Minister of Finance | Regulation on enhanced due diligence requirements for the transfer of crypto assets (Crypto Asset Transfer Regulation - KryptoWTransferV) translated to English.