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.
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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[NEW YORK, LONDON, December 5, 2023]
Notabene, the trusted leader in crypto pre-transaction decision-making, announces SafeGateway, a new solution that facilitates VASP-to-VASP interactions across various protocols. This innovative tool streamlines compliance with the Travel Rule, making it easier for virtual asset service providers (VASPs) and financial institutions to connect and transact across diverse protocols. SafeGateway is a game-changer in crypto compliance, offering unmatched ease in connecting with global counterparts and managing regulatory requirements, all through a single, user-friendly platform.
The need for SafeGateway arises from the lack of interoperability among Travel Rule compliance solutions. According to Notabene's 2023 State of Crypto Travel Rule Compliance report, 24% of surveyed VASPs identified protocol interoperability as a compliance challenge, with 20% concerned about protocol fragmentation.
Additionally, the Financial Action Task Force (FATF), the anti-money laundering watchdog that extended the Travel Rule to crypto transactions, continuously urges the industry towards interoperability. In its 2022 and 2023 Targeted Updates on Implementation of the FATF Standards on Virtual Assets and Virtual Asset Service Providers, FATF consistently urged the development of global, interoperable solutions that align with varying jurisdictional requirements, encouraging the private sector to advance interoperability through technological means or collaborative efforts.
SafeGateway emerges as Notabene’s response to this interoperability puzzle by facilitating interoperability between VASPs instead of between protocols. By offering three gateway configurations to the 5+ protocols on the market, SafeGateway provides customers with maximum reach to counterparty VASPs and institutions globally to transact safely with counterparties across disparate networks while catering to their particular security needs. This development is vital as the alternative is that companies cannot transact with counterparties who are not on their protocol.
SafeGateway is a timely solution, considering major enforcement deadlines are approaching, such as the European Union's December 30, 2024 deadline. Starting January 1, 2025, all 27 member states will have to comply with the Travel Rule, and so will their major transaction counterparties. SafeGateway allows VASPs to bypass the complexities of integrating several protocols to reach their transaction counterparties on closed networks.
How it works: Notabene’s in-network VASPs request access for specific protocols and, once approved, integrate the protocol access code into their server. SafeGateway automatically selects the appropriate protocol for Travel Rule data transfers to other network VASPs and manages the data flow. Transactions are completed and returned via SafeGateway. Customers can monitor and manage these data transfers using Notabene's compliance dashboard, allowing compliance officers to enforce consistent jurisdictional standards, apply unified rules, and produce detailed transaction reports.
“By enabling different, currently isolated protocols through SafeGateway, our customers can reach new counterparties that were not interoperable previously. This innovation aligns with Notabene’s neutral view towards protocols, and we are eager to work with them as long as they meet security and Travel Rule requirements,” said Andres Junge, CTO of Notabene. “SafeGateway is just the beginning of several initiatives we are introducing as a call to action for the industry to collaborate to achieve compliance without hindering transaction flows.”
SafeGateway represents more than just a compliance solution; it's a step towards a more interconnected and efficient future in digital asset management. By simplifying complex compliance hurdles, it opens up new possibilities for VASPs around the world. As Notabene continues to innovate, SafeGateway sets the stage for what's next in crypto compliance. Notabene continues to lead the way in creating a more seamless, compliant, and connected digital asset world.
Notabene invites the industry to connect with their Travel Rule solution that meets today's regulatory demands and anticipates and adapts to future needs and requirements.
-ENDS-
Media Contacts
Sacha Lowenthal, Head of Marketing
About Notabene
Notabene developed the crypto industry's only pre-transaction decision-making platform, enabling customers to identify and stop high-risk activity before it occurs. With a focus on security, privacy, and user experience, Notabene's multi-source data and software enable real-time decision-making, counterparty sanctions screening, self-hosted wallet identification, and more. SOC-2 security certified and trusted by over 100 companies, Notabene operates globally with headquarters in New York with a presence in Switzerland, Singapore, Germany, and the United Kingdom.
Companies like Copper, Luno, Crypto.com, and Bitstamp leverage our SafeTransact platform for Travel Rule compliance, tailored to their needs and aligned with global and local regulations. Our platform builds trust in virtual asset transactions to foster financial growth with minimized risk.
Get started today; sign up for our free SafeTransact Riseplan to respond to regulated transactions for free using the world's largest VASP Network of over 1,000 members.
Interoperability in crypto Travel Rule compliance is more than a buzzword; it's a critical necessity. This term refers to the ability of various Travel Rule messaging protocols and their networks to exchange personally identifiable information (PII) effectively without compromising safety and security. Despite its importance, interoperability remains a complex, unsolved challenge, often hindering due diligence processes and restricting virtual asset service providers (VASPs) from transacting with counterparties on different networks.
Today’s Travel Rule Compliance Landscape
Today's landscape features two core solution types: messaging protocols for data transfer and end-to-end solutions for comprehensive compliance, such as Notabene's SafeTransact. The current market features 5+ Travel Rule messaging protocols, each bringing unique technological approaches and communication methods to the table.
Travel Rule compliance solutions can be further broken down into open and closed networks.
Closed vs. Open Networks
Closed networks: VASPs undergo a comprehensive vetting process to join, and often have to pay higher membership and/or transaction fees. In closed networks, VASPs often outsource the counterparty VASP diligence process to the network. VASPs can only send data transfers to other in-network VASPs on both open and closed networks. With the more rigorous enforcement of the Travel Rule happening now across jurisdictions, this often restricts VASPs from transacting with out-of-network counterparts.
Open networks: Any VASP can join, often free of cost. The counterparty due diligence and risk assessment process is carried out between VASPs, which is in accordance with the Financial Action Task Force's (FATF's) standards.
“Compliance tool providers may therefore consider that allowing information sharing only between their users (i.e., no interoperability) will prevent information being shared with unreliable counterparties (e.g., illicit users or those with insufficient data protection controls).
The challenge with this approach is that, as set out in the FATF’s 2021 Guidance, VASPs are required to independently assess counterparty risk. While this approach may provide potential opportunities to simplify some aspects of counterparty due diligence (e.g., facilitating the identification of a counterparty VASP), it does not remove the need for VASPs to independently verify the information and ensure all relevant domestic obligations are met.” [1]
The FATF clarifies that the approach taken primarily by closed Travel Rule networks does not remove the need for VASPs to conduct counterparty VASP due diligence independently.
The Industry’s Take on Protocol Fragmentation
Nearly a quarter of VASPs surveyed identified interoperability issues as a significant hurdle to compliance, and 20% are concerned about market confusion due to the growing number of protocols. [2]
Even the FATF has emphasized the need for protocols to intercommunicate, calling for global solutions that can accommodate jurisdictional nuances. [3]
Overview of Travel Rule Messaging Protocols
A Travel Rule messaging protocol allows VASPs to exchange originator and beneficiary customer information securely. However, messaging protocols address only one of the seven FATF-outlined steps that VASPs must take to be fully Travel Rule compliant.
A comprehensive Travel Rule solution should enable businesses to:
- Identify the type of transaction counterparty.
- Apply relevant jurisdictional rules.
- Screen each counterparty for sanctions.
- Determine counterparty VASPs and assess risk scores using blockchain analytics.
- Conduct due diligence on VASPs before transactions.
- Store customer and beneficiary personal data in a GDPR-compliant manner.
- Exchange customer data with VASPs via various blockchain protocols.
Businesses must still develop a complete solution to meet the remaining six criteria.
Beyond Data Transfers: The Need for Comprehensive Compliance Solutions
A complete Travel Rule compliance solution goes beyond messaging protocols and provides support for each step of FATF’s Recommendation 16. It should include a full suite of services, from identifying counterparty types to GDPR-compliant data storage.
Notabene's Solution to the Interoperability Challenge
Notabene tackles interoperability head-on with SafeGateway, a solution that facilitates VASP-to-VASP interaction across protocols.
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NEW YORK, September 21, 2023
Notabene, the pre-transaction decision-making platform, is pleased to announce a strategic partnership with Shift Markets, a leading Crypto-as-a-Service (CaaS) solutions provider. This collaboration marks a significant industry milestone as both companies unite their expertise to help businesses navigate the complexities of the crypto market safely and efficiently.
Founded in 2009, Shift Markets has been at the forefront of the digital asset industry for over a decade, empowering businesses of all sizes to commercialize digital assets effectively. Their comprehensive suite of marketplace, payment, and exchange white-label solutions facilitates the growth of crypto-based businesses by providing them with the tools and solutions needed to succeed in today's rapidly evolving landscape.
Notabene’s SafeTransact platform enables its customers to identify and prevent high-risk activities before they occur, making crypto transactions safer and more reliable. With the SafeTransact platform, Notabene customers can automate real-time decision-making, perform counterparty sanctions screening, identify self-hosted wallets, and complete the smooth rollout of Travel Rule compliance in line with global regulation.
"By joining forces with Shift Markets, Notabene is taking a crucial step towards enhancing the safety and reliability of crypto transactions. Our SafeTransact platform empowers businesses to make real-time, informed decisions, ensuring compliance with global regulations and mitigating risks. This partnership reaffirms our commitment to making the crypto market a safer place for all participants." - Magdiela Rivas, Partnerships Lead, Notabene
"At Shift Markets, we've always been dedicated to providing comprehensive Crypto-as-a-Service solutions to our clients. This partnership with Notabene allows us to further strengthen our commitment to secure and compliant digital asset solutions. Together, we will streamline the process of establishing and maintaining digital asset businesses, ultimately saving our clients’ time and money while increasing the safety of the broader crypto industry." – Sarina Gowland, Client Success & Partnership Manager, Shift Markets
As the crypto industry continues to evolve and gain mainstream acceptance, businesses need reliable, secure, and compliant solutions more than ever before. By coming together, Notabene and Shift Markets aim to provide increased value to their clients and strengthen their relationships within the crypto industry. Through this partnership, they will connect clients with trusted partners, ensuring that they can offer virtual asset solutions in a secure and compliant manner.
-ENDS-
For media inquiries or further information about Notabene and Shift Markets, please contact:
Notabene
Sacha Lowenthal
Head of Marketing
sacha@notabene.id
Shift Markets
Sarah Cullers
Vice President of Marketing
sarah.cullers@shiftmarkets.com
About Notabene:
Notabene developed the crypto industry's only pre-transaction decision-making platform, enabling customers to identify and stop high-risk activity before it occurs. With a focus on security, privacy, and user experience, Notabene's multi-source data and software enables real-time decision-making, counterparty sanctions screening, self-hosted wallet identification, and more. SOC-2 security certified and trusted by over 100 companies, Notabene operates globally with headquarters in New York, and presence in Switzerland, Singapore, Germany, and the United Kingdom.
Companies like Copper, Luno, Crypto.com and Bitstamp leverage our SafeTransact platform for Travel Rule compliance, tailored to their needs and aligned with global and local regulations. Our platform builds trust in virtual asset transactions to foster financial growth with minimized risk.
Get started today; sign up for our free SafeTransact Rise plan to respond to regulated transactions for free using the world's largest VASP Network.
About Shift Markets:
Shift Markets is a CaaS (Crypto-as-a-Service) solutions provider Founded in 2009 that enables any sized business to commercialize digital assets to grow their business.
Shift offers a range of technological and service-based products for businesses operating within the crypto and traditional markets. To date Shift has successfully launched 200+ exchanges across our products. With offices, exchanges, and partners worldwide, Shift is a truly global company.
As seen previously on Nasdaq, PYMNTS, Sail GP, Algorand, Hedera, & Messari
Travel Rule compliant VASPs face several challenges in identifying their counterparties pre-transaction. The lack of a standardized way for linking blockchain addresses to counterparties and the complexity of dealing with different sorts of counterparties creates uncertainty about who is on the other side of a transaction—critical data for triggering Travel Rule compliance procedures.
Recent insights underscore this issue: a majority of surveyed VASPs have expressed a need for a universal identification method in line with existing Travel Rule protocols, and 52% of respondents reported to send Travel Rule transfers to all VASPs without applying any criteria or counterparty due diligence process. [1] This issue could lead to regulators imposing widespread restrictions on transacting unless a counterparty is identified.
To address this gap, Notabene releases Network Discoverability, a privacy-preserving mechanism for identifying VASPs through blockchain addresses.
Introducing Network Discoverability
We've recently launched the Network Discoverability, a feature that empowers in-network VASPs to securely auto-identify blockchain addresses. This addition to our product suite feature reflects our commitment to equipping Compliance Officers with robust tools, ensuring seamless interactions with counterparties while upholding stringent security and compliance standards.
How does Notabene’s Network Discoverability help you?
With Notabene's Network Discoverability, in-network VASPs can quickly and reliably identify their counterparties in real time. This feature ensures adherence to the Travel Rule’s due diligence mandates and streamlines transactional efficiency by eliminating unnecessary redundancies in verifications.
- Efficient and Accurate Transaction with Trusted Counterparties: The Network Discoverability feature allows VASPs to automatically identify blockchain addresses on both ends, ensuring data is directed to the correct party. This enhances the speed and accuracy of transactions.
- Enhanced Security: VASPs can safely share their encrypted blockchain addresses within Notabene's Network by opting in, ensuring that hashed addresses remain confidential and irreversible.
- Reduces Transaction Friction: Removing the need for end-user input at the transaction level enables VASPs to increase reachability and reduce transaction friction and latency.
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A comparative overview: before and after Network Discoverability
Without Network Discoverability: When an Originator VASP A sends a Travel Rule transaction, the Beneficiary VASP must repeatedly claim the blockchain address. If Originator VASP B sends a transaction to the same address, it must go through the steps to discover the VASP behind the transaction to the same address. VASPs may need to ask the end customer to identify the counterparty VASP, and the Beneficiary VASP must claim the address again, which adds to overall transaction latency.
With Network Discoverability: VASPs share cryptographically hashed versions of their blockchain addresses, which are stored privately in a segregated database. If any VASP sends a transaction to that address in the future, the system quickly provides the hashed address, automatically verifying it for the sender.
Network Discoverability is a testament to Notabene's innovative approach to Travel Rule compliance, enhancing SafeTransact’s existing suite of services. VASP Discoverability accelerates and simplifies verification for all involved parties, by securely storing and disseminating encrypted blockchain addresses across a cooperative network. By opting into this feature VASPs are able to leverage the power of the Notabene Network, reduce friction for their end users, and increase the speed in which Travel Rule messages are created.
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Stablecoins have become a critical part of the evolving cryptocurrency landscape. Given their significance, it's crucial to grasp their role concerning the Crypto Travel Rule.This final article in our three-part series compares perspectives from both the Financial Action Task Force (FATF) and the European Union's (EU) positions on decentralized finance (DeFi), Stablecoins, and non-fungible tokens (NFTs).
This article covers Stablecoins, the EU’s and FATF’s general stance on whether they are regulated virtual assets, if stablecoin issuers are regulated as VASPs, and covers noteworthy developments over 2022.
What are Stablecoins?
Firstly, let's understand what stablecoins are. Stablecoins are a specialized type of cryptocurrency crafted to minimize price volatility. Unlike virtual currencies such as Bitcoin or Ethereum, which are known for their price fluctuations, stablecoins aim to maintain a consistent value. They achieve this stability by tying their value to a reserve asset, often a fiat currency like the US Dollar or the Euro, or other types of assets like gold. In essence, the value of a stablecoin is tied to the value of the underlying asset or group of assets to maintain a 1:1 ratio or another predetermined ratio.
Types of Stablecoins
Stablecoins can be categorized into three main types based on what backs them:
- Fiat-Collateralized Stablecoins: These stablecoins are backed by a reserve of a specific fiat currency, kept in a bank or another regulated financial institution. In simple terms, for each stablecoin in circulation, an equivalent amount of fiat currency is held as a reserve.
- Crypto-Collateralized Stablecoins: These are stablecoins that are backed by other cryptocurrencies. Given the volatile nature of cryptocurrencies, these stablecoins are typically over-collateralized to account for price swings.
- Algorithmic Stablecoins: These stablecoins aren't backed by any collateral. They use smart contracts and other mechanisms to automatically tweak the stablecoin supply in reaction to demand changes, with the end goal of maintaining a stable price.
The primary uses of Stablecoins
Stablecoins serve multiple functions, including facilitating transactions, acting as a stable store of value within the cryptocurrency market, and forming a bridge between traditional fiat currencies and cryptocurrencies. Importantly, they are often used in DeFi applications for various financial activities like lending, borrowing, and earning interest on crypto assets.
The Rise and Scrutiny of Stablecoins in 2022
Stablecoin usage surged in early 2022 but faced scrutiny in the latter half of the year after the collapse of TerraUSD. TerraUSD was a popular algorithmic stablecoin whose dollar peg broke down due to massive concurrent withdrawals from Anchor and Curve crypto exchanges, causing a broader selloff that wiped off $200 billion from the market value of all crypto-assets.
The collapse of TerraUSD generated new concerns over stablecoins' safety, leading policymakers to impose rules on stablecoin issuers. Moreover, regulators and central banks became concerned about the rise of stablecoins eroding their monetary monopoly. Below we highlight relevant stablecoin events in 2022:
Stablecoin Legal & Regulatory Spotlight in 2022
- January 12, 2022 📋- The Hong Kong Monetary Authority (HKMA) released a discussion paper that provided insight into the HKMA’s plans for the future of stablecoin regulation in Hong Kong.
- May 9, 2022 - UST's peg to USD broke, leading to the price of UST and its sister token LUNA crashing. This wiped $200 billion from the market value of all crypto assets.
- June 3, 2022 - Japan’s parliament passed a bill to ban stablecoin issuance by non-banking institutions.
- July 13, 2022 📋- The Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commission (IOSCO) affirmed that the Principles for Financial Market Infrastructures apply to ‘systemically important’ stablecoin arrangements and transfers.
- July 19, 2022 - The UK Chancellor announced the planning of a bill that sets out how stablecoins may be used as a payment method.
- September 21, 2022 - Members of the U.S. Congress began working on legislation that would temporarily ban certain types of algorithmic stablecoins.
- October 5, 2022 📋- The EU’s MiCA laid out strict stipulations for stablecoin issuers due to their potential for mass adoption as a means of exchange as well as their associated market integrity risks.
N.B. The dates that are accompanied by a clipboard icon indicate a document that was produced by a regulator.
How Does the Crypto Travel Rule Apply to Stablecoins?
Both the FATF and the EU have established significant stances regarding stablecoins. The FATF views stablecoins with concern due to their potential for anonymity, global reach, and potential misuse for illegal fund transfers. As such, it calls for a risk-based approach for identifying obliged entities. The EU's Markets in Crypto-assets (MiCA) regulation provides a more differentiated treatment, distinguishing stablecoins based on whether they qualify as significant asset-referenced or e-money tokens, each carrying distinct regulatory requirements. Notably, the FATF classifies stablecoins as securities or VAs, whereas the EU determines if a crypto-asset falls within the scope of MiCA depending on the nature of the token, including algorithmic stablecoins.
FATF vs. EU: General Stance on Stablecoins
FATF: Stablecoins rank high on the list of the FATF’s concerns “because of their potential for anonymity, global reach, and use to layer illicit funds.” The FATF also calls out their “greater potential for mass adoption” as stablecoins overcome the volatility issues associated with other crypto-assets and, therefore, constitute a more suitable option for payments. The FATF expects countries to “take a functional approach to identify obliged entities” and “mitigate the relevant risks based on a risk-based approach (RBA) regardless of institutional design and names.” [1]
EU: MiCA distinguishes the treatment of stablecoins depending on whether they qualify as significant asset-referenced tokens or significant e-money tokens, as these “can pose greater risks to financial stability.” [2] Issuers of significant asset-referenced tokens or significant e-money tokens are subject to more stringent requirements including “higher capital requirements, to interoperability requirements and they should establish a liquidity management policy.” [3]
FATF vs EU: Are Stablecoins considered Virtual Assets?
FATF: FATF classifies stablecoins as securities or VAs.
EU: Where a crypto-asset falls within the definition of an asset-referenced token or e-money token, it falls under MiCA’s scope, irrespective of how the issuer designed the crypto-asset, including the mechanism to maintain a stable value - this includes algorithmic stablecoins. [4]
FATF vs. EU: Are Stablecoin issuers regulated as VASPs?
FATF: Entities involved in the governance of stablecoins, whether centralized or decentralized, could be categorized as VASPs depending on their position and the terms of the stablecoin arrangement. In situations where decentralized entities manage the stablecoin (e.g., MKR token holders who monitor Maker Protocol), it becomes more difficult to identify the entity responsible for AML/CTF. In these cases, entities that could fall within the scope for regulatory or supervisory action are the following:
- The initial driver of the development and launch of the arrangement that eventually becomes decentralized.
- One that facilitates trading with stablecoins.
- Custodial wallet services that support stablecoins. [1]
EU: Algorithmic stablecoins issuers that aim at maintaining a stable value in relation to an official currency of a country or to one or several assets, via protocols, are subject to the rules applicable to asset-referenced tokens or e-money issuers. Offerers or persons seeking admission to trading of algorithmic crypto-assets that do not aim at stabilizing the value of the crypto-assets by referencing one or several assets are, in any event, subject to the requirements applicable to the issuance of other crypto-assets (set in Title II of MiCA). [4]
FATF vs. EU: Noteworthy Stablecoin Developments
FATF: In it’s Targeted Update, the FATF states, “As the liquidity of stablecoins increases in parallel with the growth of DeFi markets, FATF will continue to facilitate discussion between jurisdictions and other standard setting bodies on implementation issues.” [5]
EU: Stablecoin issuers should have a custody policy that ensures asset segregations, prevents tokens from being used as collateral, and provides holders with prompt access to their funds. Credit institutions, investment firms, or VASPs should custody the insulated reserves. The credit institution, an investment firm, or a VASP that custodies the segregated reserve should be responsible for the loss of reserve assets. [6]
In summary, the Crypto Travel Rule has far-reaching implications for stablecoins. Both the FATF and EU offer varied approaches in their regulations, primarily distinguishing stablecoins based on their nature, usage, and associated risks. As stablecoins continue to gain prominence in the crypto market, further evolution of regulatory stances is anticipated. Understanding these rules and how they apply to stablecoins will play a significant role in shaping the future trajectory of these digital assets.
Discover the link between the crypto Travel Rule and Stablecoins in Notabene's comprehensive 2023 State of Crypto Travel Rule Compliance Report.
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This article was initially produced when the "Markets in Crypto-Assets" document was still in draft form. However, the content has been updated to reflect the final regulation as published by the EU Parliament in 2023 [EU Parliament (2023). Markets in Crypto-Assets, various pages and paragraphs].
[Originally posted by FOMO Pay, see here]
SINGAPORE, 29 Aug, 2023 – FOMO Pay, a leading digital payment and digital banking solutions provider headquartered in Singapore, announces its strategic partnership with Notabene. The implementation of Notabene’s end-to-end solution for global Travel Rule compliance enables FOMO Pay to further enhance its know-your-transaction (KYT) capabilities and highlights FOMO Pay’s commitment to compliance and customer security. In addition, through comprehensive licensing and adherence to regulatory requirements, FOMO Pay has obtained “Super VASP” status in Notabene’s Virtual Asset Service Providers (VASP) network. This milestone empowers the public with streamlined access to accurate and verified business information, aligning with FOMO Pay’s consistent efforts to foster trust in the digital payment and digital asset fields.
In 2019, the Financial Action Task Force (FATF) released crucial recommendations aimed at combating money laundering, terrorist and proliferation financing. FATF requires countries to assess and mitigate risks associated with virtual asset financial activities and providers. As part of the requirements, the Travel Rule mandates all VASPs to screen, record and communicate the information of both the sender and recipient of a digital asset transaction. In 2023, the global regulatory landscape has evolved with stricter enforcement of the Travel Rule for digital asset transactions, as governments and financial institutions worldwide take significant steps to enhance transaction integrity and overall financial ecosystem security.
In order to maintain comprehensive digital asset compliance capabilities in the ever-evolving digital asset industry, FOMO Pay adopts a proactive approach in investing in leading compliance solutions to continue to ensure strict adherence to global regulations. Integration with Notabene equips FOMO Pay to automate Travel Rule compliance in line with global regulations, allowing secure and efficient digital asset transactions.
“We are pleased to partner with Notabene and integrate their Travel Rule solution. This collaboration represents FOMO Pay’s commitment to strengthening our compliance capabilities in alignment with global regulations, enabling informed decisions to enhance our AML capabilities,” said Wee Teck Lim, Head of Compliance at FOMO Pay. “We firmly believe that our collaboration with Notabene will further enhance our ability to provide secure and reliable digital payment and digital asset solutions to our valued clients and partners.”
“We are excited to be working with FOMO Pay to enrich their compliance capabilities and ensure safer digital asset transactions for their clients. FOMO Pay’s commitment to bridging the gap between fiat and digital assets for business use cases is very aligned with our mission at Notabene. This collaboration demonstrates the significant impact of Travel Rule implementation in facilitating secure and efficient digital asset transactions to build a safer and more accessible digital asset ecosystem.” – Pelle Braendgaard, CEO of Notabene.
With this partnership, FOMO Pay demonstrates its steadfast commitment to upholding industry standards in compliance by ensuring safer transactions involving digital assets for merchants, corporates and financial institutions. FOMO Pay’s proactive approach to regulatory compliance and strategic investments in robust solutions solidify its position as a leading digital payment solutions provider.
-ENDS
Media Contact
Sacha Lowenthal
Head of Marketing, Notabene
sacha@notabene.id
About Notabene
Notabene developed the crypto industry’s only pre-transaction decision-making platform, enabling customers to identify and stop high-risk activity before it occurs. With a focus on security, privacy, and user experience, Notabene’s multi-source data and software enables real-time decision-making, counterparty sanctions screening, self-hosted wallet identification, and more.
SOC-2 security certified and trusted by over 100 companies, Notabene operates globally with headquarters in New York, and presence in Switzerland, Singapore, Germany, and the United Kingdom.
Companies like Copper, Luno, Crypto.com and Bitstamp leverage our SafeTransact platform for Travel Rule compliance, tailored to their needs and aligned with global and local regulations. Our platform builds trust in virtual asset transactions to foster financial growth with minimized risk.
Get started today; sign up for our free SafeTransact Rise Plan to respond to regulated transactions for free using the world’s largest VASP Network.
About FOMO Pay
Founded in 2015, FOMO Pay Pte Ltd is a major payment institution (License No. PS20200145) regulated under the Payment Services Act in Singapore, licensed by the Monetary Authority of Singapore (MAS) to conduct Cross-border Money Transfer Services, Domestic Money Transfer Services, Digital Payment Token Services and Merchant Acquisition Services. The firm has become a leading one-stop digital payment and digital banking solution provider, and is currently building Asia’s first licensed gateway helping institutions and businesses to connect between fiat and digital currency. The company offers its three flagship products:
- FOMO Payment: a one-stop digital payment solution for merchants, corporates and financial institutions.
- FOMO iBank: facilitates businesses’ every-day requirements for transactional banking needs.
- FOMO Crypto: Asia’s first licensed gateway bridging fiat and digital currency.
Visit www.fomopay.com for more information.
The world of crypto compliance has seen rapid changes over the past year. Since the Financial Action Task Force (FATF) extended Travel Rule compliance for crypto custodians, global events and pivotal moments have rapidly propelled Virtual Asset Service Providers (VASPs) from mere contemplation to active implementation of these AML compliance measures.
But what's genuinely fueling this accelerated adoption? Join us as we explore the primary motivations prompting VASPs to invest in Travel Rule solutions.
The Six Reasons Pushing VASPs to Find Crypto Compliance Solutions:
1. Upcoming enforcement deadlines
As deadlines approach, VASPs run out of time to develop a cohesive compliance strategy, test direct integration into various protocols, and evaluate end-to-end solutions. Integrating and testing different protocols slows down the path toward Travel Rule compliance, with Compliance Officers spending upward of 18 months trialing protocols to fit the company’s specific needs.
Additionally, Exchanges registered in a jurisdiction where the Travel Rule is already enforced: US, Singapore, Switzerland, Philippines, South Korea, Germany, Canada, Indonesia, Malaysia, Gibraltar, Estonia, Dubai, Liechtenstein, Malta, Portugal, Japan, Hong Hong, the United Kingdom, as well as exchanges that send a large volume of transactions to VASPs in those jurisdictions, must roll out Travel Rule compliance as soon as possible.
2. Business preservation and transaction assurance
As more and more VASPs become compliant with the Travel Rule, the expectation for their counterparty VASPs to receive travel rule information and respond reciprocally is growing. If the counterparty VASP does not participate in travel rule flows, it's becoming increasingly likely that compliant VASPs will simply stop transacting with them. Proactive compliance is paramount to avoid business and, more specifically, transaction slowdowns. Additionally, per FATF guidance, VASPs can now restrict transactions with non-compliant counterparts.
Our 2023 State of Crypto Travel Rule Compliance Report highlights that about 61% of respondents enforce transaction restrictions with non-cooperative counterparties: 8% need a Travel Rule message sent to the beneficiary VASP, 41% employ a risk-based approach, and 12% await a response from the Beneficiary VASP. Non-responsive counterparties risk losing transactions from compliant VASPs, making this a critical reason for VASPs to invest in compliance solutions.
3. Stakeholder demand
VASPs are rolling out Travel Rule solutions quickly to meet the demand from their banking partners, auditors, institutional customers, and other business stakeholders.
It is now a standard expectation for VASPs to be travel rule compliant when applying for new banking partners, getting audited, or establishing other business relationships. Demonstrating compliance with the Travel Rule improves a VASP's likelihood of passing the due diligence requirements to establish solid banking relationships. By including the Travel Rule in their compliance stacks, VASPs demonstrate their risk management strategies to auditors, align with industry standards, and meet regulatory expectations, bolstering their reputation as trusted market participants.
4. Increased regulatory scrutiny due to sanctions
The Russia-Ukraine war accelerated crypto Travel Rule compliance. Financial regulators have implemented fresh sanctions against Russian organizations and persons in response to the crisis between Russia and Ukraine. Although it is unknown to what extent sanctioned parties may turn to crypto, VASPs worldwide have acted upon the increased imperative to comply with sanctions obligations. Without crypto Travel Rule compliance, VASPs can—often unknowingly—facilitate transactions with sanctioned counterparties. Transactions associated with entities like Garantex, Bizlatzo, or any other sanctioned crypto service pose a substantial compliance risk for businesses in the U.S. and other jurisdictions, with potential fines and criminal charges as consequences.
Therefore, it's crucial for VASPs to be able to discern whether their clients are sending transactions to sanctioned entities, wallets, or jurisdictions. This can only be achieved by diligently implementing Travel Rule compliance, which enables transaction-level counterparty and sanction insight.
5. To benefit from an incremental Travel Rule adoption
Forward-thinking VASPs are strategically using a phased rollout to their advantage. Ahead of their regulatory timelines, they are getting started with collecting the necessary counterparty data, putting in place the systems, and easing into the travel rule. This puts them in a great place to be ready without excessive strain on resources and with minimized impact on their customers.
Thanks to industry advocacy, some regulators are warming up to this staged approach to compliance. Recent surveys highlight an increasing preference for this phased approach: 31% in the current year, up from 18% in 2022.
6. To gain a competitive edge
It goes without saying: regulated financial products distinctly outshine their unregulated counterparts by offering numerous advantages. Advantages include crucial investor protection, stringent legal compliance, unwavering financial stability, improved market confidence, effective dispute resolution mechanisms, and indispensable consumer safeguards. Additionally, crypto compliance ensures safer transactions, strengthens trust, and strategically positions VASPs as reputable market players for enhanced growth and reach.
How Notabene Addresses the Six Reasons VASPs Are Considering Travel Rule Solutions
1. Notabene’s multi-jurisdictional approach facilitates seamless onboarding for VASPs across various jurisdictions
With imminent deadlines, globally-operating VASPs confront the challenge of staggered Travel Rule enforcement across their jurisdictions. This leaves them scrambling to craft a unified compliance strategy in each location, integrate protocols for each entity, and assess comprehensive solutions.
For example, a VASP located across three jurisdictions may need a Money Services Business (MSB) license in the United States in Canada, a Digital Payment Token (DPT) license in Singapore, and a license from the Federal Financial Supervisory Authority (BaFin) in Germany—each with distinct compliance requirements.
Notabene's SafeTransact provides a streamlined solution tailored for global businesses, offering support across 20+ jurisdictions and counting. VASPs choose us to expedite their Travel Rule compliance with multiple regions. Additionally, VASPs can leverage our SAFE Implementation program; VASPs can seamlessly integrate and fast-track their regulatory adherence, ensuring business continuity and regulatory alignment. Learn more below.
2. SafeTransact Rise: Notabene’s answer to business preservation and transaction assurance
Our customers’ success is our primary goal, and we understand that without responses to their Travel Rule transactions, our VASPs may not be able to achieve full compliance. Recognizing that many businesses may not have the tools to handle these responses, we offer SafeTransact Rise - a complimentary Sunrise Plan that provides transaction beneficiaries access to our comprehensive Travel Rule compliance dashboard to respond to unlimited inbound messages, as well as and send up to USD 10k in outgoing transactions. While on our platform, Compliance Officers can test out setting up safe, automated compliance workflows and utilize award-winning partnerships with blockchain analytics and sanctions screening providers.
3. Demonstrating Travel Rule compliance readiness with Notabene's SafeTransact
When implemented correctly—pre-transaction settlement— Travel Rule compliance equips VASPs with detailed insights into transactional counterparties and allows VASPs to ascertain if clients transact with sanctioned entities, wallets, or regions.
As the industry’s only pre-transaction decision-making platform, Notabene's SafeTransact preemptively identifies and halts high-risk activity before reaching the exchange. Our platform offers a comprehensive view of crypto transactions, allowing users to automate real-time decisions, screen counterparties for sanctions, recognize self-hosted wallets, and ensure seamless global Travel Rule compliance following international regulations.
Additionally, VASPs use our reporting tools to demonstrate their Travel Rule compliance programs, including verified data about their transactions, counterparties, and VASPs’ steps to build robust compliance measures.
4. Set rules to automatically stop transactions to sanctioned actors
Our customers can effectively identify sanctioned counterparties and block ensuing transactions by performing the following checks before the transaction occurs:
- Identifying counterparty VASP
- Performing VASP due diligence
- Identifying and sanction screening counterparty customers
- Monitoring wallet risk scores
To automate this process, customers head to the Rules Engine to encode their risk-based rules to restrict incoming or outgoing Travel Rule data transfers with VASPs that do not meet their diligence criteria. This step also allows them to identify and block suspicious transactions at scale. By tying this mechanism into the transaction flow, this functionality boosts transaction efficiency and provides Compliance Officers with robust tools to mitigate AML-related risks effectively.
5. SAFE Implementation phases: benefit from a comfortable Travel Rule adoption
We advocate for a phased, data-driven approach to Travel Rule implementation. Our SAFE Implementation process offers Notabene clients a tailored pathway to compliance based on their business needs. Customers can meet regulatory guidelines and evolve their own risk-based approach and needs over time - with the first phase requiring less than a week with only minimal technical integration. Furthermore, as part of the implementation phases, Notabene's SafeTransact platform provides industry-unique support for multiple legal entities, allowing VASPs to easily expand into multiple jurisdictions without worrying about complex legal and compliance issues. Our goal with SAFE Implementation is to make a comfortable Travel Rule technical rollout so VASPs can focus on other matters, such as incorporating new compliance requirements into their business workflows.
Learn more about SAFE Implementation
6. Notabene: competitive edge through specialized Travel Rule training & solutions
Due to its novelty and operational intricacies, fully harnessing the advantages of Travel Rule compliance requires learning a new set of rules. For the latest training on this regulation, Notabene offers a Travel Rule Compliance Certification, equipping Compliance Officers with the tools they need to succeed in 2023 and beyond.
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As the Travel Rule deadline approaches, UK has made significant strides that directly impact UK VASPs’ compliance programs. In this article will highlight the key milestones and takeaways from recent regulatory publications and how Notabene is responding to these developments. Stay informed and engaged with the most relevant regulatory developments concerning Travel Rule compliance in the UK with Notabene.
Relevant Travel Rule regulatory milestones in the UK
The timeline below gives a brief overview of the most relevant milestones for Travel Rule compliance in the UK:
Key Travel Rule Takeaways from the JMLSG Guidance
On July 28, 2023, the Joint Money Laundering Steering Group (JMLSG) published a draft Travel Rule guidance that is now up for public consultation. CryptoUK’s Travel Rule Working Group, co-chaired by Notabene’s Senior Regulatory and Compliance Associate Catarina Veloso, shared insights and feedback with regulators and the JMLSG ahead of the publication of this draft. Both Notabene and CryptoUK will submit a response to the public consultation, by August 25, 2023.
Find the key takeaways below:
- Sunrise Issue: The current draft of the JMLSG Guidance acknowledges the Sunrise period as presenting “challenges for CBs dealing with counterparties in jurisdictions where the travel rule has not yet been implemented”. The current draft guidance advises Crypto Businesses (CBs) to take account of any FCA communications on this matter. Learn the FCA’s specific expectations for UK VASPs transacting during the sunrise period below.
- Cross-border Transactions: The Guidance clarifies that UK VASPs must follow UK Travel Rule requirements, regardless of whether their counterparty is subject to a different scope of requirements.
- Self-hosted Wallet Transactions: The guidance offers VASPs detailed advice on risk assessment and appropriate actions for self-hosted wallet transactions.
- Counterparty Discoverability: With no global VASP identifiers, the guidance suggests steps VASPs can take to identify counterparties and ascertain wallet hosting status.
- Lightning Network: The draft discusses Travel Rule application within the Lightning Network, stating intermediate parts of a transfer are not subject to the rule, even if nodes are CBs.
Dive deeper into the takeaways on our recent blog post.
FCA Statement: How UK VASPs should proceed with transactions during the sunrise period
On August 17, 2023, the FCA published its expectations for UK cryptoasset businesses complying with the Travel rule. The publication outlined how UK VASPs are required to comply with the Travel Rule when sending or receiving a transaction from a counterparty based in a jurisdiction where Travel Rule does not yet apply.
- When sending a transaction to a jurisdiction without the Travel Rule, if the counterparty VASP cannot receive the necessary information, the Originator UK VASP must still collect and verify the information as required by the Money Laundering Regulations (MLRs) and should store that information before making the cryptoasset transfer.
📌 Notabene clients can monitor the transfers sent to VASPs that are not able to receive Travel Rule information within their compliance dashboard.
- When receiving a transaction without the required Travel Rule information, UK Beneficiary VASPs must make a risk-based assessment of whether to make the cryptoassets available to the beneficiary customer taking into account the status of Travel Rule regulations in the jurisdiction where the counterparty operates.
📌 Notabene clients are able to detect and monitor incoming transactions with missing Travel Rule information via API. These transactions will appear in their compliance dashboard.
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SAFE Implementation: The Importance of a Phased Implementation when Rolling out a Travel Rule Program
As the Global Head of Customer Success at Notabene, I regularly consult with Compliance leaders at the start of their Travel Rule implementation journey.
While many understand the importance of complying with the Travel Rule, they often feel overwhelmed regarding how to get started, especially during the sunrise period and when dealing with multiple jurisdictions or areas needing more regulatory clarity. The technical work for a successful integration only compounds these concerns.
In this article, I'll explore the top Travel Rule compliance challenges experienced by the Compliance Officers I have worked with, explain why Notabene devised the SAFE Implementation phases, and present the advantages of the adoption program based on commentary directly from VASPs.
Understanding the Technical Challenges of Travel Rule Implementation
Many VASPs find it challenging to comprehend the extent of technical work required for integration. They also struggle to figure out how they can effectively collaborate with stakeholders from various departments in their business to ensure that the Travel Rule solution is implemented successfully.
As VASPs progress through the implementation, they often find it beneficial to opt for API integration to automate their Travel Rule processes instead of hiring additional teammates to manually carry out Travel Rule compliance checks. However, Without having insight into the specific actions the technical team needs to complete or alignment between how the implementation might look based on a VASPs risk appetite, Compliance leaders are often at a loss for where to begin to ensure they are meeting regulatory deadlines.
Notabene's 2023 State of Crypto Travel Rule Compliance Report affirms this, with 27% of VASPs and 45% of Financial institutions citing 'a lack of technical resources’ as their main obstacle to adoption.
SAFE Implementation: A Guided Approach to Travel Rule Compliance
"The secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small manageable tasks and then starting on the first one." - Mark Twain
With these challenges in mind, we recently launched the SAFE Implementation phases. This step-by-step onboarding program is designed to help our clients navigate the intricacies of Travel Rule compliance efficiently while ensuring seamless collaboration between compliance and technical teams.
SAFE Implementation delivers a well-structured, step-by-step approach to achieving compliance, streamlining operational risk management, and providing valuable analytics to steer our customers through their Travel Rule implementation. By making subtle technical modifications, VASPs can effortlessly link their internal systems to Notabene, enabling the generation of proprietary data.
This rich data resource furnishes invaluable insights into the potential impact of compliance on existing transaction flows, equipping VASPs with the foresight to plan the initiation and response to transactions strategically. Additionally, this information empowers them with a clear roadmap for their journey toward achieving full compliance.
How does SAFE Implementation support VASPs?
- Step-by-Step Implementation and Testing: SAFE Implementation enables customers to gradually integrate the necessary technical infrastructure, validate data accuracy, and test functionality, all before they impact their end users. By breaking down the implementation process into manageable stages, customers can identify and address issues early, ensuring a smoother transition and reducing non-compliance risk.
- Navigate Complex Regulatory Requirements: Compliance with the Travel Rule requires significant technical, operational, and procedural adjustments. By adopting a phased implementation approach, we ensure that our customers have adequate time and support to comprehend the requirements and implications of the Travel Rule fully. Notabene’s SafeTransact product manages each Jurisdictional data requirement, supporting VASPs in understanding what data they must provide to comply in their region. It also ensures that VASPs can handle the requirements of their counterparty's jurisdictions.
- Tailored Solutions for Diverse Customer Needs: Every business has unique operational models, technical capabilities, and customer bases. By utilizing our SAFE Implementation process, VASPs can design and implement tailored solutions based on their specific requirements. This ensures a more seamless integration of Travel Rule compliance processes into VASPs' existing systems, minimizing disruptions to their day-to-day operations.
- Guidance and Training from the Customer Success team: Successfully implementing the Travel Rule requires technical integration, adequate coaching, and ongoing support. VASPs can also choose to add a Customer Success Package, ensuring that they get custom training and white glove support from our team of subject matter experts. The Notabene Customer Success team is on hand through each milestone to provide comprehensive training sessions, resources, and dedicated customer support throughout the implementation journey. This empowers our customers to develop an in-depth understanding of the Travel Rule requirements and equips them with the necessary knowledge and skills to maintain compliance in the long term.
- Compliance Readiness and Regulatory Confidence: By adopting a phased onboarding approach, our customers can demonstrate their commitment to regulatory compliance with relevant authorities. This proactive approach ensures adherence to the Travel Rule, helps build trust with regulators, and enhances the reputation of the crypto business. Furthermore, early compliance readiness positions our customers favorably in the rapidly evolving regulatory landscape, reducing the risk of potential penalties or disruptions to their operations.
Far from being a mere regulatory checklist, achieving Travel Rule compliance involves understanding the regulatory landscape, strategic planning, and data-informed pre-transaction decision-making, all facilitated through our SAFE Implementation approach.
Notabene's SAFE Implementation program is not just a tool—it's a strategic ally that guides VASPs through the intricate terrain of crypto regulation. With the aid of crucial data and a tailored approach, VASPs can execute their compliance plans with heightened precision and assurance. This seamless and effective integration results in regulatory adherence and fosters trust with regulators, strengthening the business's reputation.
The rest of Notabene’s Customer Success team and I are dedicated to helping our customers turn regulatory compliance from a daunting challenge into a competitive advantage, effectively driving the future of the crypto industry.
This setup provides a systematic, step-by-step roadmap to ensure synchrony between technical and compliance teams, transforming an overwhelming task into achievable milestones.
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The Rising Trend of a Phased Approach to Crypto Travel Rule Compliance: Insights from Notabene's 2023 Report
Notabene's 2023 State of Crypto Travel Rule Compliance Report revealed a trend: Virtual Asset Service Providers (VASPs) are adopting a phased approach to fulfilling Travel Rule compliance obligations. This means they are gradually transitioning from non-compliance to compliance, taking measured steps toward ‘full compliance.’ [1] This nuanced insight is often missed in industry surveys, yet deserves attention as it reflects VASPs' practical and mindful strategy to adhere to the Travel Rule.
What is a Phased Approach to Travel Rule Compliance?
A “phased approach” is a strategy that VASPs used to progressively meet their full compliance obligations, taking into account the impact on their users and business. To become regulatory compliant, VASPs must carry out several processes simultaneously. These range from modifying product offerings, implementing new compliance frameworks, updating the user interfaces and APIs their customers interact with, and much more. The situation gets even more complex if the VASP operates in multiple jurisdictions.
Results from our compliance survey showed that rather than making a sudden leap from non-compliance to full compliance, VASPs are progressively rolling out their compliance initiatives in phases. This year, the adoption of a phased compliance strategy has risen to 31%, up from 18% in 2022 (Figure 2). This indicates an increasing acceptance of the phased compliance methodology among VASPs. Further details can be found in the sections below.
Why are VASPs Embracing a Phased Approach to Travel Rule Compliance?
Reported reasons VASPs opt for a phased approach to Travel Rule compliance include:
- The Sunrise period: Fully complying with the Travel Rule during sunrise is particularly difficult for VASPs, as crypto is inherently borderless and international. VASPs based in countries where the Travel Rule is already being enforced will have a hard time being fully compliant; in some instances, they may not be able to send or get a response to a Travel Rule transfer from their counterparty VASP because this counterparty may be based in a jurisdiction where the Travel Rule is not yet enforced.
- Signaling compliance to regulators: Having a clear and well-structured Travel Rule implementation program is appreciated by financial regulators. This approach allows VASPs to refine their processes on their path to full compliance.
- Meeting local Travel Rule enforcement dates: If a VASP is registered in a jurisdiction with upcoming deadlines, they have to prove compliance whether or not their counterparties are compliant.
Diving into the staged approach to Travel Rule compliance
Notabene's yearly State of Crypto Travel Rule report shows a growing intent to adopt the Travel Rule in the cryptocurrency industry, with most VASPs targeting complete compliance by 2023, as evidenced by the data in Figure 1.
Understanding the meaning of ‘Full Compliance’
The industry's ambition to comply by the end of 2023 underscores its commitment to regulatory alignment and sets 2023 to become the year of Travel Rule adoption. Interestingly, the survey exposes a stark 109% rise in compliance claims, with 20% of respondents now identifying as 'fully compliant,' a significant increase from 13% in 2022. (Figure 1) However, pre-transaction fulfillment has only seen a 50% increase, suggesting some confusion around the interpretation of 'full compliance.' (Figure 1)
The Phased Approach to Compliance Gains Traction
The survey highlights that 19% of VASPs are responding to inbound Travel Rule transfers, even if they aren't initiating their own, and 12% are fulfilling Travel Rule obligations post-settlement. (Figure 2) These actions are viewed as early compliance stages. Moreover, when asked to describe their company's current stance on Travel Rule requirements, only 3% selected "Idle" as their response. This response signifies a substantial 75% decrease from the 2022 survey, pointing to a progressive demystification of Travel Rule compliance within the industry.
Financial Institutions vs. Crypto Businesses Staged Compliance Approach
Survey data reveals a significant contrast between financial institutions (FIs) and crypto businesses in their compliance strategies for the Travel Rule. The approach taken by FIs appears more binary: they are predominantly either fully compliant (36%) or not complying at all (36%). A noteworthy 27% of FIs are at an intermediate stage, only responding to inbound Travel Rule transfers. (Figure 3) This may be attributed to their support for crypto deposits without accommodating crypto withdrawals.
Crypto businesses, on the other hand, present a more diverse spectrum of compliance stages, with 48% opting for a phased approach. (Figure 3) This could stem from many of these businesses being operational before FATF’s Recommendation 16 extended its reach to their sector.
FI’s, having likely operated under FinCEN’s original Travel Rule, mandated in 1996, may only need to implement the technology to support Travel Rule compliance for their crypto transactions. This stark difference in approach underscores the unique challenges VASPs and FIs face in their compliance journey. Consider reading about the top Travel Rule compliance hindrances in 2023 for more on these challenges.
Notabene's Phased Approach to Travel Rule Compliance: The SAFE Implementation Phases
To aid VASPs and FIs in their compliance journey, Notabene recently introduced the SAFE Implementation phases. This tiered, customizable approach simplifies compliance, equips customers with valuable analytics, and creates a tailored path based on specific business needs.
The SAFE phases offer the following benefits:
- Minimized Disruption: This phased integration of technical infrastructure mitigates risks and reduces disruption
- Regulatory Navigation: It allows sufficient time to understand the technical, operational, and procedural aspects of the Travel Rule.
- Continuous Improvement: The iterative nature of our method encourages constant learning and adaptation.
- Comprehensive Support: Notabene's Customer Success team provides extensive training and dedicated support.
- Regulatory Confidence: This gradual strategy demonstrates a commitment to regulatory compliance, cultivating trust with regulators.
The SAFE Implementation paves a reliable route toward Travel Rule compliance by emphasizing regulatory deadlines and leveraging data for informed decisions, risk mitigation, and user experience enhancement.
A Breakdown of the SAFE Implementation Phases
Notabene's phased approach for VASPs' Travel Rule compliance comprises four distinct stages, each addressing specific aspects of the adoption process. The phases are:
- Spark: VASPs prepare to send transactions by collecting counterparty VASP data through due diligence, assessing the degree of customer input required for a comprehensive Travel Rule message.
- Amplify: VASPs commence compliance to the greatest extent possible without customer collaboration, sharing originator information with counterparts, and responding to incoming Travel Rule transfers.
- Foundation: VASPs expand compliance by acquiring beneficiary information, conducting sanctions screening, and applying proper AML/CTF controls before transmission to the beneficiary VASP. This stage is standard during the sunrise period.
- Elevate: VASPs utilize verified originator and beneficiary data for informed pre-transaction decisions on both withdrawals and deposits. This phase is fully achievable in a post-sunrise period.
Mapping the 2023 State of Crypto Travel Rule Compliance Survey Data to the Safe Implementation Phases
Data from figure 2 suggests that most VASPs are still in the early stages of compliance, like the Spark and Amplify phases. A considerable number are complying to the best of their ability within the constraints of the sunrise period, aligning with the Foundation stage. Only a minority have achieved full Travel Rule compliance (Elevate.)
Here's a more detailed breakdown:
- VASPs that reported non-compliance with travel rule obligations (34.8%) or post-settlement compliance (11.6%) and those allowing transactions without a Travel Rule message sent to the beneficiary VASP (37.3%) are in compliance stages akin to the Spark or Amplify phases.
- VASPs fulfilling Travel Rule obligations before blockchain transaction settlement (20.3%) but not awaiting a beneficiary VASP response to process the transaction (22%) or proceeding if no response is received within a specific timeframe (14%) are likely in a compliance stage similar to the Foundation phase.
- A small portion of VASPs (12% that reported disallowing a transaction unless a beneficiary VASP response is received) would qualify as being in the Elevate stage.
For a unique look into the Travel Rule compliance journey from the perspective of Notabene’s Customer Success team, head over to our next blog post. In "Overcoming Crypto Compliance Challenges: Notabene's SAFE Implementation Phases in Action," Notabene’s Global Head of Customer Success, Abigail Bryant Spolar, offers valuable insights drawn from her extensive experience guiding VASPs
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A Closer Look at CryptoUK’s Travel Rule Working Group and the Upcoming JMLSG Guidance: Insights from the Co-Chair
We are thrilled to announce that Catarina Veloso, Notabene's Senior Associate of Regulatory Affairs, has been appointed as the co-chair of CryptoUK’s Travel Rule Working Group. Catarina shares this esteemed position with Mark Aruliah, Senior Policy Advisor at Elliptic.
Notabene's Regulatory and Compliance team is taking a proactive role in helping members of the group CryptoUK understand the requirements of the Financial Action Task Force's (FATF) Travel Rule. The Travel Rule has been implemented in the UK through the Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 (MLTFR 2022) on July 21st, 2022.
Navigating the FATF's Travel Rule: CryptoUK’s Working Group's Efforts to Educate UK VASPs
The Notabene Regulatory and Compliance team is dedicated to not only educating CryptoUK members about the requirements of this rule but also to engaging with policymakers and regulators to share their insights and perspectives on the topic.
The FATF's Crypto Travel Rule is a regulation that requires certain information to be included with transactions between virtual asset service providers (VASPs). In the case of the UK, the MLTFR 2022 would be the specific set of rules that VASPs, like cryptocurrency exchanges, have to comply with.
Following a 12-month grace period, the Travel Rule will be enforced in the UK from September 1st, 2023. On July 28, 2023, the Joint Money Laundering Steering Group (JMLSG) published a draft Travel Rule guidance that is now up for public consultation. CryptoUK’s Travel Rule Working Group shared insights and feedback with regulators and the JMLSG before publishing this draft. The next order of business for the working group is submitting a response to the public consultation, due on August 25, 2023.
“Travel Rule compliance entails several new operational challenges for VASPs. And UK VASPs are in a really privileged position to overcome them - the fact that you are able to produce industry-led guidance through the JMLSG is a unique opportunity to have a say on how these challenges should be addressed and to define industry-wide compliance standards” - Catarina Veloso, Senior Associate of Regulatory Affairs - Notabene.
The JMLSG is a private sector body comprising the leading UK Trade Associations in the financial services industry. They produce Guidance that sets out what is expected of firms and their staff concerning the prevention of money laundering and terrorist financing, which is now being extended to cover the crypto Travel Rule.
Although the JMLSG Guidance is not legally binding, it is subject to approval by the HM Treasury and is taken into consideration by the FCA when supervising and by courts. Therefore, the JMLSG Guidance will provide a base from which UK VASPs can develop tailored policies and procedures for compliance with the Travel Rule.
JMLSG’s Draft Guidance on the Travel Rule: What It Means for UK Cryptoasset Businesses
The current draft of the JMLSG Guidance covers essential topics such as:
📌 Sunrise issue: The Sunrise period is acknowledged as presenting “challenges for CBs dealing with counterparties in jurisdictions where the travel rule has not yet been implemented.” The current draft guidance advises VASPs to take account of any FCA communications on this matter. Just yesterday, the FCA published a statement on precisely this topic. This statement sets expectations for how VASPs in the UK are required to comply with the Travel Rule when sending or receiving a transaction from a counterparty based in a jurisdiction where Travel Rule does not yet apply, as follows:
When sending a cryptoasset transfer to a jurisdiction without the Travel Rule:
- Take all reasonable steps to establish whether the firm can receive the required information.
- If the firm cannot receive the necessary information, the UK cryptoasset business must still collect and verify the information as required by the Money Laundering Regulations (MLRs) and should store that information before making the cryptoasset transfer.
When receiving a cryptoasset transfer from a jurisdiction without the Travel Rule:
- If the cryptoasset transfer has missing or incomplete information, UK cryptoasset businesses must consider the countries in which the firm operates and the status of the Travel Rule in those countries.
- The UK cryptoasset business should take these factors into account when making a risk-based assessment of whether to make the cryptoassets available to the beneficiary.
📌 Cross-border transactions: The Guidance clarifies that UK VASPs must follow UK Travel Rule requirements, regardless of whether their counterparty is subject to a different scope of requirements. For withdrawals, the Guidance clarifies that “[w]here the transfer is to a jurisdiction with higher requirements than those required in terms of the travel rule, a CB complies with its travel rule obligations by providing the information as required.”. Similarly, in deposits, “[w]hen there is missing or inaccurate information, the CB of the beneficiary must, when appropriate, request the missing information (regardless of whether the CB of the originator is subject to higher value thresholds in its jurisdiction), and consider making enquiries as to any discrepancies.”.
📌 Self-hosted wallet transactions: The Guidance provides more granularity into how VASPs can assess the risk associated with transactions with self-hosted wallets and determine the appropriate follow-up actions.
📌Counterparty discoverability: Acknowledging that it is challenging to discover the counterparty to a crypto transaction (in the absence of global VASP identifiers, equivalent to SWIFT codes in wire transfers), the Guidance suggests reasonable steps that VASPs can take to identify the counterparty and whether a wallet is hosted or unhosted.
📌Lightning network: JMLSG also covered the specificities of how Travel Rule applies in the context of the Lightning Network, acknowledging that “[t]hose parts of a LN transfer that are intermediate to originator and beneficiary are not in scope of the travel rule even where one or both nodes in the channel are CBs.”
Notabene's Proactive Role in UK Travel Rule Compliance: Regulatory Sandbox Testnets and Guidance for VASPs
Notabene's Regulatory and Compliance team is dedicated to assisting UK VASPs in understanding and complying with their upcoming Travel Rule obligations.
As part of that effort:
- We have conducted two testnets as part of the Financial Conduct Authority’s (FCA’s) Regulatory Sandbox with firms such as Ramp, Bitstamp, Wirex, CoinPass, Altalix, Hidden Road, Bitpanda, Custody, Uphold, and Zodia Markets.
- We published a brief guide that summarizes the Travel Rule obligations set forth in the MLTFR 2022.
We invite you to join the CryptoUK’s Travel Rule Working Group to be part of the conversation, contribute to the public consultation response, and continue engaging with policymakers and regulators on this topic.
What is the Financial Action Task Force (FATF) and what does it do?
Virtual Assets and VASPs (Virtual Asset Service Providers): What are they?
What is the Crypto Travel Rule?
What Is Anti-Money-Laundering (AML) and How Does It Apply to Crypto?
What is Counter-Terrorism Financing (CTF), and how does it apply to Crypto?
What is KYC in Crypto, and why do crypto exchanges require it?
FATF's Final Guidance for Virtual Assets and VASPs
What is the Sunrise Issue?
Travel Rule compliance challenges and opportunities for VASPs
What Are Travel Rule Messaging Protocols?
How Can VASPs Ensure Travel Rule Compliance During Transactions With Unhosted Wallets?
How Decentralized Identifiers (DIDs) are Shaping the Crypto Travel Rule Infrastructure
What Is Counterparty Crypto Wallet Identification & How Does It Work?
VASP Due Diligence: Establishing Trust in Counterparty Sanctions Screening
Six Reasons VASPs Are Investing in Travel Rule Solutions Right Now
Ten Interoperability Tips for VASPs
Travel Rule Implementation by jurisdiction
The Current State of Crypto Travel Rule Enforcement [April 2023]
Which VASPs are Currently Travel Rule compliant?
Travel Rule Compliance in the European Union: An In-Depth Analysis
Notabene vs. FATF's Travel Rule Compliance Tool Criteria
Travel Rule Compliance in the European Union: Summary
FATF Travel Rule Requirements in the European Union
FATF Travel Rule Requirements in Singapore
The State of Crypto Travel Rule Compliance Report 2024
The Crypto Pre-Transaction Decision-Making Guide
FATF Travel Rule Requirements in Canada
FATF Travel Rule Requirements in Malaysia
FATF Travel Rule Requirements in the Philippines
Notabene vs. Hong Kong SFC’s Compliance Criteria
The State of Crypto Travel Rule Compliance Report 2023
FATF Travel Rule Requirements in Gibraltar
FATF Travel Rule Requirements in Hong Kong
FATF Travel Rule Requirements in Dubai
FATF Travel Rule Requirements in Japan
FATF Travel Rule Requirements in the United Kingdom
Crypto Travel Rule 101 Guide
FATF Travel Rule Requirements in Switzerland
FATF Travel Rule Requirements in Estonia
How Luno Singapore met Travel Rule Regulations using Notabene
Crypto Compliance: Unique Cases and State of Regulatory Landscape in 2022
The State of Crypto Travel Rule Compliance Report 2022
Introducing SafeConnect Components: Seamless end-to-end TFR Compliance
On October 29th, we debuted our game-changing solutions for self-hosted wallet compliance, built to meet the latest EU Transfer of Funds Regulation (TFR) requirements.
We'll also showcased our brand-new SafeConnect Components, a powerful embedded UX suite designed to streamline Travel Rule workflows, solve the new TFR requirements, and empower businesses to offer their users a seamless, secure, and fully compliant crypto transaction experience – with just five lines of code ✨
We covered:
- Live demo of the self-hosted wallet solution
- Overview of the product architecture and capabilities
- In-depth exploration of the value that VASPs can capture
- A preview of our upcoming product roadmap
Miss the live event? No worries, we recorded it for you!
Just submit the form on the right to watch the video on-demand.
Become an Expert on Travel Rule in the EU
Do you have customers in the EU?
The European Union's Transfer of Funds Regulation, complemented by the European Banking Authority (EBA)'s Travel Rule Guidelines, sets new benchmarks for financial transparency and security requirements for any Virtual/Crypto Asset Service Provider (VASP/CASP) that has customers in the EU.
How does this your company? The answer depends greatly on the unique needs of your business. It's critical that you educate yourself on the specifics of TFR regulation before implementing your Travel Rule program for the EU.
Take the first step by completing our in-depth certification course that will clarify all of the new rules and transform you into a true expert on Travel Rule in the EU.
Course Coming Soon - Sign up to be notified when our comprehensive course on TFR regulation is ready for enrollment.
Notabene Launch Event: SafeTransact for Networks Live Demo
In an era marked by a thriving bull market and increasingly complex regulatory environments, achieving maximum reachability with your transaction authorization solution is more critical than ever. Walled gardens and competing closed networks not only slow your entry into new jurisdictions but can also significantly impact your revenues.
Introducing: SafeTransact for Networks 🌐
SafeTransact for Networks instantly increases reachability for all our customers. It enables existing networks, such as custodial services, settlement, and liquidity providers, to seamlessly integrate multi-party transaction authorizations within their current operations. No more joining multiple Travel Rule protocols or worrying about interoperability. With SafeTransact, businesses gain instant access to all its active members, fostering trust and connectivity across different crypto ecosystems.
We are thrilled to announce that Fireblocks will join us for this event. As a leader in digital asset custody and security, Fireblocks will share insights from our partnership and their perspective on the future of custody infrastructure and payments. Discover how integrating compliance into their network has benefited them and how SafeTransact for Networks can further enhance your operations.
Live Demonstration Highlights
- SafeTransact for Networks: Extend the power of SafeTransact to your entire network, boosting reachability and transaction volumes while staying compliant with international regulations.
- New Capabilities: Enjoy enhanced support for multiple counterparties, expanded use cases beyond the Travel Rule, and leverage our innovative decentralized Transaction Authorization Protocol (TAP).
- 2024 Travel Rule Milestones: Learn how these updates align with the December 30th deadline for TFR compliance in the EU.
This live event was held on June 27, 2024. To watch the recording, fill out the form on this page and you will be redirected to the video.
Insights From the State of Crypto Travel Rule Compliance Report 2024 — APAC
Register for this on-demand webinar to dive into the latest crypto compliance challenges and insights, featuring key findings from Notabene's "State of Crypto Travel Rule Compliance Report 2024."
Our in-depth exploration will highlight the current compliance landscape, drawing on a comprehensive industry survey to share exclusive proprietary knowledge.
Topics include:
Principal insights from the industry survey
Overview of key regulatory developments in 2023 crypto
Analysis of prevalent compliance challenges
Evaluation of stakeholders poised to address these challenges
Global compliance metrics and due diligence protocols among VASPs
Strategies by VASPs for managing non-compliant transactions
Join us to gain a thorough understanding of the Travel Rule adoption in crypto and prepare your organization for success in 2024.
Insights From the State of Crypto Travel Rule Compliance Report 2024 — EMEA / Americas
Dive into an in-depth exploration of the latest compliance challenges and insights in crypto Travel Rule adoption, featuring key findings from Notabene's "State of Crypto Travel Rule Compliance Report 2024."
Drawing on a comprehensive industry survey, we will provide an extensive overview of the current compliance landscape and share exclusive proprietary knowledge.
This webinar covers:
Principal insights from the industry survey
Synopsis of significant regulatory developments in crypto for 2023
Analysis of prevalent compliance challenges
Evaluation of stakeholders poised to tackle these challenges
Global compliance metrics and due diligence protocols among virtual asset service providers (VASPs).
Approaches adopted by VASPs for managing non-compliant transactions, and much more.
and much more.
Enter your information to watch this webinar on demand.
Notabene Launch Event: Preparing Your Business for Mass Travel Rule Adoption in 2024
Join us for the Notabene Launch Event, where we're unveiling pioneering solutions to tackle compliance complexities, and prepare your business for mass Travel Rule adoption in 2024.
As Travel Rule adoption reaches its inflection point, navigating its implementation across various jurisdictions, or meeting the rigorous demands of handling unhosted wallets presents a formidable challenge for companies of all sizes.
This virtual event showcases pressing compliance issues in 2024 with insights and strategies to keep your organization ahead of the curve.
Here's what you can expect:
Unlock exclusive insights from Notabene’s report on the State of Crypto Travel Rule Compliance, revealing the urgency of adoption this year. 🔒
Discover how Notabene is the only solution on the market that allows you to maintain your global reach while complying with local regulation anywhere in the world.
How Notabene supports over 300 wallets to address growing regulatory requirements for unhosted wallets.
Dive into handling compliance and Travel Rule for all real-world transactions and counterparty types. Addressing the fallacy of existing Travel Rule protocols.
Don't miss this exclusive Launch Event where Notabene provides invaluable guidance and pragmatic solutions to navigate the compliance landscape of 2024.
Pre-Transaction Decision-Making in Crypto: Preventing Illicit Activity Before Transaction Settlement
Empower Your Crypto Transactions: Understanding Pre-Transaction Obligations
Join the Notabene team, as we explore the pivotal topic of pre-transaction decision-making in crypto transactions. In this insightful webinar, we will dive into the essential strategies that can help you prevent illicit activity before it occurs in the world of cryptocurrency transactions.
This on-demand webinar covers:
- Strategies to Mitigate Illicit Activities: Learn how to prevent illicit activities before crypto transactions are finalized.
- Crypto vs. Fiat Travel Rules: Understand the critical differences and why early risk management is essential.
- Regulatory Landscape: Explore pre-transaction regulatory obligations with examples from UK guidelines.
- Benefits of Pre-Transaction Decision-Making: Discover how it can enhance your compliance efforts in the crypto space.
- Operational Challenges: Address challenges such as returning funds
- Key Features: Integrations and blockchain authorization flows.
And much more.
Watch on-demand by filling in the form above.
Everything Intermediary VASPs Need to Know About The Travel Rule
Travel Rule flows often involve Intermediary VASPs. It is important to understand what your obligations look like if you qualify as an Intermediary or when you interact with one. In this webinar we examine the definition of Intermediary VASP under different jurisdictions and investigate obligations that apply to these stakeholders.
Spoiler alert: if you are a custodian, this webinar is for you!
Speakers:
Moderator: Lana Schwartzman, Head of Regulatory and Compliance at Notabene
Andrew Price, Chief Compliance Officer at Zodia Markets
Laurent Girouille, General Manage at Komainu
Catarina Veloso, Regulatory and Compliance, Senior Associate at Notabene
Why Travel Rule & Counterparty Risk Management Is Required To Get Your VARA License
Learn how the Travel Rule fits into your Compliance Stack
In January 2023, Dubai’s Virtual Asset Regulation Authority (VARA), provided a detailed framework for regulation with a focus on Travel Rule.
During this webinar, Lana Schwartzman, Notabene’s Head of Regulatory & Compliance, will host compliance experts, as they discuss where Travel Rule sits in the VARA Rulebook and why it is important.
Panelists:
Amardeep Thandi, Compliance & Regulation EMEA, Chainalysis
Tracy Ellen Angulo, J.D., CFE, CAMS, Director, Guidehouse
Laurent Girouille, General Manager, Komainu
Watch on-demand today to find out:
How Travel Rule is required to get your VARA license
How Travel Rule is part of the Compliance/AML stack
What is the global picture for travel rule
What are the main requirements and challenges VASPs should be aware of?
A comparative look at Travel Rule in the USA and Canada
When? 🗓 Dec 7 @ 3pm GMT / 10am ET
When transacting cross-borders, it’s important that VASPs consider any jurisdictional differences in Travel Rule requirements and best practices.
During this Compliance Deep Dive, Notabene’s Lana Schwartzma, Head of Regulatory & Compliance, and Catarina Veloso, Legal Engineer, will compare the approaches to Travel Rule in the USA and Canada.
Our hosts will deep dive into several components of Travel Rule requirements and discuss the key differences in these two regions that all compliance professionals should be aware of.
Travel Rule in Crypto: What all Compliance Officers should Know
Join Catarina Veloso, Notabene's Legal Engineer (and Travel Rule expert), and Tung Li Lim, Elliptic’s Senior Policy Advisor, APAC, as they dive into the real world challenges and opportunities of Travel Rule implementation.
When? 19th October 9am BST / 4pm SGT
This webinar will cover:
The Travel Rule explained
Regulatory Landscape review
FATF’s Targeted Update
Travel Rule implementation
The Pitfalls of Travel Rule compliance
There will be time saved at the end of the webinar for Q&A.
How to Solve the Crypto Travel Rule's Sunrise Issue Today
The Travel Rule, like the sun, rises at different times worldwide. Therefore, the "sunrise period" in crypto compliance refers to the period during which the Travel Rule is not in full effect across jurisdictions, which causes additional challenges for VASPs that are already required to comply. - coining the term Sunrise Issue within crypto Travel Rule compliance.
A growing number of VASPs are receiving requests for travel rule data transfers before they have Travel Rule solutions in place but are still expected to respond. FATF's Travel Rule guidelines stipulate that VASPs should limit or completely restrict transactions with counterparty VASPs that do not reply to their Travel Rule data transfers.
Notabene's Legal Engineer - Catarina Veloso, will host a webinar to help break down what the Sunrise issue actually means, the hindrances that the sunrise period brings, as well as practical solutions that allow compliance teams to overcome these challenges without needing technical resources or budget approvals.
Register today to find out more about:
What is the Sunrise Issue
Operating during the 'Sunrise'
Dealing with the Sunrise Issue - practical solutions
VASPs subject to travel rule requirements
VASPs that are not yet subject to Travel Rule requirements
What Does the FATF Targeted Update on Implementation Mean For You?
Watch on-demand
Three years have passed since the Financial Action Task Force (FATF) extended its anti-money laundering and counter-terrorist financing (AML/CFT) Standards to financial activities involving Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) to respond to the threat of criminal and terrorist misuse.
On June 30th 2022, the FATF released its' Targeted Update on Implementation of FATF’s Standards on VAs and VASPs’, which provides an overview of areas of progress that countries and the industry have made and continued implementation gaps and concerns.
Join Notabene’s CEO, Pelle Braendgaard and FATF Virtual Asset Contact Group (VACG) Co-Chair, Takahide Habuchi, as they discuss:
- Key takeaways from FATF’s Targeted Update
- Global approach to Travel Rule
- Transactions with unhosted wallets
- Crypto Compliance vs Traditional Finance
Compliance Deep Dive: Travel Rule in the European Union (2022)
In this session, Catarina Veloso covers the Transfer of Funds Regulation and dives into how it impacts Travel Rule obligations for European VASPs. She guides a group of crypto Compliance Cfficers through the European legislative process and the milestones that the Transfer of Funds Regulation has already gone through. Additionally, she touches upon the regulation’s critical provisions around Travel Rule while bearing in mind that all of this is still subject to change.
Register today to dive into, The European legislative process, The European Transfer of Funds Regulation’s key provisions around Travel Rule, and The scope of application, including:
De-minimis threshold
Required PII
Counterparty due-diligence
Sanction screening
Unhosted wallets
Exceptions
+ Much more.
Compliance Deep Dive: Back to the Basics of Travel Rule
In this Compliance Deep Dive session, Notabene’s Legal Engineer, Catarina Veloso, will cover the basics of Travel Rule compliance.
Currently, we see many companies getting started on tackling Travel Rule compliance due to the increasing urgency from both regulators and counterparties.
Hence, we figured that this would be good timing to:
Reiterate the key Travel Rule compliance requirements; and
Demonstrate a Travel Rule flow, from A to Z, using Notabene's platform and with the help of illustrative diagrams.
Navigating Crypto Regulations in Singapore in 2021
2020 marked an instrumental year for crypto companies in Singapore. As they applied for the PSA license, they had to introduce rigorous AML programs and started implementing the Travel Rule. What's next in 2021? A joint webinar brought to you by Notabene and Merkle Science.
Panelists:
Ian Lee - Founding team and VP of Business Development at Merkle Science (Moderator)
Aymeric Salley - Head of StraitsX at Xfers
Julia Chin - Managing Consultant at JFourth Solutions
Pelle Braendgaard - Founder and CEO of Notabene
Navigating Crypto Regulations in the UK and EU in 2021
2021 is a critical year for crypto businesses and financial institutions across the EU and the UK as they grapple with new regulatory requirements. In this webinar, the panelists discuss upcoming trends, potential challenges and areas they'd like regulators to provide insight on. A joint webinar brought to you by Notabene and Merkle Science.
Panelists:
Pelle Braendgaard, Co-Founder and CEO of Notabene (Moderator)
Ian Taylor, Chair of CryptoUK
Jacek Czarnecki, Global Legal Counsel at the Maker Foundation
Lucy James, General Counsel at Luno
Mriganka Pattnaik, Founder and CEO of Merkle Science