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SafeGateway: Enhancing Travel Rule Compliance Reachability in a Fragmented Landscape

The Notabene Team
The Notabene Team
December 5, 2023
A member of the Notabene team crafted this post.
Table of Contents
Summary

Notabene is trusted by over 120 virtual asset service providers (VASPs), encompassing major banks, custodians, and exchanges, for seamless Travel Rule compliance. Our platform, SafeTransact, facilitates millions of regulatory-compliant transactions monthly involving more than 300 assets and has processed transfers originating from over 20 jurisdictions. Additionally, we cover a wide range of 10,000 assets, further demonstrating our comprehensive global approach to Travel Rule compliance — a primary factor in why companies worldwide choose us.

Given the rapidly evolving landscape of crypto technology and its inherently cross-border scope, we recognize the impracticality of a single, unified Travel Rule messaging system today. Insights from traditional payment systems show us that institutions often need to interact with multiple systems, each catering to unique requirements.

In the absence of an industry-wide unified messaging system, Notabene offers SafeGateway. SafeGateway is a solution that facilitates VASP-to-VASP interaction across protocols.  
Learn more below.

The Challenge of Fragmented Messaging Protocols

When the Financial Action Task Force (FATF) extended the Travel Rule to virtual assets in 2019, there was no standard or messaging layer for the secure transfer and receipt of end-user data. Now, in 2023, the situation has evolved. While standards have emerged, the industry confronts a new challenge: an overwhelming assortment of Travel Rule messaging protocols, each useful in its own way but collectively creating a fragmented landscape that complicates compliance and, more generally, transaction flows. It is impractical and resource-intensive for VASPs to connect to multiple protocols independently. However, not connecting limits VASPs' ability to comply and restricts their ability to transact with a wide reach of counterparties.

See our previous article for further information on the Interoperability Challenge of Travel Rule Compliance.

This current state of affairs is akin to the early days of email, with different protocols leading to a lack of smooth communication. Just as the email world moved towards interoperable standards like SMTP and IMAP, the crypto sector now stands at a similar juncture. 

messaging gateway examples

SafeGateway emerges as Notabene’s response to this interoperability puzzle by facilitating interoperability between VASPs instead of between protocols. It is a gateway into multiple protocols empowering VASPs to reach their counterparts across disparate networks.

Introducing SafeGateway: Enhancing Reachability to Enable Travel Rule Compliance Across the Market in a Fragmented Landscape

We're thrilled to launch SafeGateway, a solution that facilitates VASP-to-VASP interaction across protocols. SafeGateway acts as a protocol agent, facilitating seamless connections with any compatible Travel Rule protocol. This development allows our clients to apply a unified compliance approach using Notabene’s platform while easily accessing counterparties across different protocols. 

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Fast benefits:

  • Discoverability: Leverage the discoverability methods of other Travel Rule protocols.
  • Connectivity: Engage with VASPs using different Travel Rule protocols.
  • Efficiency: Apply jurisdiction requirements, manage uniform rules, and generate reports centrally.

SafeGateway enables our customers to link with VASPs through integrations with various existing Travel Rule messaging systems and networks. This approach ensures maximum global reach, allowing secure and efficient transactions with all counterparty institutions, and brings transactions to SafeTransact’s all-in-one Travel Rule compliance dashboard. 

Key Features of an Optimal Travel Rule Messaging Protocol

At Notabene, we believe that a crypto Travel Rule messaging system should ideally meet the following requirements:

  • Accessibility: An open network with low or no fees to join and transact
  • Business Process Integration: Ties into underlying business processes like trading, settlement, or payments
  • Privacy and Security Standards: Best-in-class measures to safeguard sensitive data
  • Future-Proof Technology: Simplifies scalability and increases counterparty reachability
  • Regulatory Compliant flows: Flows aligned with the latest regulatory requirements

Currently, no messaging systems fully meet all five essential requirements. However, as they evolve, those that adhere to crucial security and regulatory compliance standards will be viewed neutrally and invited to integrate with SafeGateway.

How SafeGateway Works

The setup and operation of each gateway depends on the specific Travel Rule protocol being used. With some protocols, Notabene will build and operate agents independently, while with others, a joint effort with the protocol's developers is required. 

For Notabene clients, SafeGateway is ready for immediate use, enabling connections to supported Travel Rule protocols and for which clients have the necessary access credentials. This convenience allows our clients to seamlessly utilize these connections through the Notabene platform without dedicating their technical resources. However, it's important to note that using SafeGateway does not substitute for the process of joining each protocol's network, especially those that require separate onboarding.

Learn more about SafeGateway for VASPs.

SafeGateway Benefits both VASPs and Protocols

For VASPs, SafeGateway and SafeTransact provide a unified hub for managing transactions and compliance reporting functions, featuring comprehensive risk analysis capabilities that operate seamlessly across protocols. VASPs can apply cohesive compliance controls without sacrificing counterpart reach. For protocols, integrating with Notabene’s SafeGateway means accelerated adoption by VASPs globally as they overcome integration challenges, compliance standardization, and shared technical collaboration.

A Call for Industry Collaboration

The FATF “urges the private sector to progress towards interoperability, whether through technological advancements that allow interoperability between tools or by developing relationships that permit transactions to be made through a chain of interoperable tools.” [1]

In our pursuit to make crypto transactions part of the everyday economy, we understand the necessity for transactions to be secure, efficient, and regulatory compliant. SafeGateway is our call to action for industry collaboration, aligning with the FATF's directives and contributing to setting a new standard for secure and compliant transactions.

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References

[1] FATF (2023). Targeted Update on Implementation of the FATF Standards on Virtual Assets/VASPs, paragraph 32.

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