Notabene's TR:Now allows VASPs to implement the Travel Rule now
It’s been a year since the FATF (Financial Action Task Force) released comprehensive guidelines for crypto companies to implement anti money-laundering processes for virtual asset transactions. In July 2020, FATF recognized in its annual review (we summarized it for you here) that many companies have demonstrated willingness and effort to implement the Travel Rule into their day-to-day business.
1. Travel Rule brings many challenges into the crypto world.
While the crypto industry has made significant stride toward proposing technical solutions for the Travel Rule, crypto companies still face many challenges when it comes to implementation of the guidelines:
- Lack of interoperability between protocols: Multiple Travel Rule protocols lead to interoperability issues where one VASP (Virtual Asset Service Provider) cannot transact with another because they’re supporting different protocols.
- Time spent on integration: Companies need to spare weeks of development effort to integrate with a protocol and maintain it over time. As a consequence of the issue mentioned above, many companies might be forced to implement more than one protocol. This leads to a lot of development resources spent on compliance, which otherwise could have been spent building the core business product.
- Change of internal processes and user flows: In many cases, Travel Rule implementation forces companies to introduce significant changes to their user flows. Until there are Travel Rule solutions broadly adopted, it’s difficult to predict at this point how seriously those changes will impact businesses’ internal processes and user experience.
- Waiting on the sidelines: High implementation costs lead to a situation where VASPs are waiting on the sidelines to see which solution other VASPs will choose. Obviously, no one wants to invest in implementing a protocol that no one else uses. This is an issue because it delays compliance with the Travel Rule.
- Pressure from local regulators: The challenges above are causing delays in adoption. Local regulators in multiple jurisdictions are starting to pressure companies to move forward with integrations and prove that they are working towards Travel Rule compliance.
2. Notabene’s TR:Now as a jumpstart towards compliance
To help companies overcome challenges related to implementation of the Travel Rule, Notabene built TR:Now, a lightweight email-based solution that helps VASPs comply from day one.
TR:Now consists of sending Travel Rule requests to any VASP via email, regardless if they have implemented the Travel Rule or not. The counterparty VASP can then access IVMS-101 Originating Customer information via a secure dashboard. We built TR:Now based on demand from compliance teams to start testing Travel Rule flows within their systems and to show regulators that they are taking steps toward compliance.
This lightweight solution has the following benefits:
- No need to decide on a protocol yet
TR:Now does not require companies to be on a protocol yet, so it solves the chicken/egg problem of implementing the Travel Rule. VASPs can start securely exchanging data between each other regardless of which protocol they use or if they don’t use any protocol.
- Easy jumpstart to future protocol integrations
The originating and beneficiary customer data is stored in IVMS101 format (industry technical standard), and securely saved on the dashboard. This solution acts as a bridge to the TRP protocol and OpenVASP.
- Fast onboarding, no technical work required
To use TR:Now, compliance officers just need to create their VASP’s profile and they're ready to go. There is no need to involve developers to implement APIs into the backend or make changes to existing user flows.
- First step towards compliance
TR:Now allows compliance officers to test and learn about the potential impact of the Travel Rule on their daily operations and user flows. It already comes with built-in counterparty verification, helping compliance teams perform due diligence on other VASPs. By using TR:Light, they familiarize themselves with these new processes and can start planning ahead how to create more seamless flows for their business. In addition, this could serve as proof to local regulators that a VASP is taking its first steps towards Travel Rule compliance.
If the challenges above sound familiar, contact us to learn more about TR:Now.