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Merkle Science & Notabene partner to help VASPs with FATF’s Travel Rule

Alice Nawfal
Alice Nawfal
October 19, 2020
Alice Nawfal, with a rich background in blockchain, public policy, and consulting, leverages her extensive experience in business operations and analytics to drive Notabene's growth and operational efficiency.

Merkle Science, a leading provider of blockchain transaction monitoring and intelligence solutions, has partnered with Notabene to help companies dealing with cryptocurrencies comply with the Travel Rule. Notabene is a compliance platform designed to bridge crypto markets with traditional financial systems. The company helps financial service companies comply with new crypto regulations coming into effect such as the Financial Action Task Force’s (FATF) Travel Rule for virtual asset service providers (VASPs). 

What’s the Travel Rule

FATF, a global intergovernmental organization to combat money laundering and terrorism financing, announced in June 2019 that its Recommendation 16 — which relates to the inclusion of sender and beneficiary information during wire transfers — would also apply to Virtual Asset Service Providers on cryptocurrency transactions. This guideline is commonly referred to as the crypto Travel Rule and is currently being implemented and enforced locally by the FATF’s members in their jurisdictions. For instance, the Monetary Authority of Singapore (MAS) has enacted this rule as part of its Payment Services Act, which went into effect on January 28, 2020. VASPs are required to be compliant with this new rule or face consequences including not receiving a license for continued operations in a jurisdiction, receiving fines, or being shut down. To comply, VASPs need to solve for multiple technical and operational challenges:

  • Identifying who’s behind a blockchain address, and assessing the risk associated with the transaction.
  • If it is a custodial address, performing due diligence on the counterparty VASP.
  • Sharing customer information with the counterparty in a secure way.

Why the Merkle Science and Notabene Partnership is Crucial for VASPs

Merkle Science and Notabene have partnered to help VASPs comply with the Travel Rule and local anti-money laundering regulation. Notabene provides a comprehensive travel rule solution for VAPSs, allowing them to easily perform due diligence on counterparties and securely share customer information. Through a product integration with Merkle Science, compliance officers at VASPs who use both services will be able to better assess the risks of counterparty VASPs and blockchain wallets. They would be able to view risk scores in the Notabene platform and set rules to manage these transactions accordingly.

“Complying with local as well as international crypto crime prevention regulations is now a mandatory criterion for VASPs. Our partnership with Notabene is aimed at making regulatory compliance seamless for VASPs and financial institutions. The joint platform will enable organizations to effectively manage high-risk transactions, customize transaction monitoring rules according to local laws, seamlessly download and file STR/SAR reports, and comply with stringent regulatory requirements,” said Mriganka Pattnaik, Co-founder and CEO of Merkle Science, on the occasion.

“Juggling regulatory compliance while enabling growth into new markets is quickly becoming a competitive advantage among VASPs. The new global regulatory framework from FATF is becoming not only a requirement to do business, but also opens up a wider segment of retail and institutional customers. We believe that holistically managing risk around crypto transactions will end up enabling businesses to increase their transaction volume. We are excited to work together with Merkle Science on helping our customers manage regulatory requirements and transaction risk,” explained Pelle Braendgaard, Co-founder and CEO of Notabene, about the potentials of the partnership.

About Merkle Science 

Merkle Science provides blockchain transaction monitoring and intelligence solutions for cryptoasset service providers, financial institutions and government agencies to detect, investigate and prevent the use of cryptocurrency for money laundering, terrorist financing, and other criminal activities. Merkle Science is headquartered in Singapore with offices in Bengaluru, Seoul, and Tokyo and backed by Digital Currency Group, Kenetic, SGInnovate, and LuneX.

About Notabene

Notabene helps crypto asset service providers and other financial institutions manage risks around transactions by intelligently combining identity data around their customers and financial counterparties. This allows their customers to implement the new requirements of the FATF Virtual Assets guidelines including the Travel Rule and ownership proofs of blockchain accounts. Notabene is a Y Combinator company and has offices in New York, Zürich, and Santiago de Chile.