The FATF’s Recommendation 16 on Wire Transfers, “Travel Rule,” requires virtual asset service providers (VASPs), financial institutions, and obliged entities to exchange originator and beneficiary identifying information with counterparties during crypto transfers above $1,000.*
*Note that different jurisdictions have different transaction threshold amounts.
Before this recommendation, and due to the public nature of blockchain transactions, no messaging protocols to send and receive customer personally identifiable information (PII) existed. Various companies and industry working groups created several Travel Rule messaging protocols to address a large component of travel rule compliance: safely and securely transferring customer PII alongside blockchain transactions.
This article will assess:
A Travel Rule messaging protocol allows VASPs to securely exchange Originator and Beneficiary Customer information securely.
As a comparison, the two most widely used internet standard communication protocols for email transmission are SMTP (Simple Mail Transfer Protocol) and Internet Message Access Protocol (IMAP). Mail servers and other message transfer agents use SMTP and IMAP to send and receive mail messages. To comply with FATF’s Travel Rule Recommendation, VASPs need a similar messaging protocol to exchange originator and beneficiary information.
Once FATF recommended the Travel Rule, various working groups and private companies took on the task of building viable initiatives to solve the technical aspect of the Travel Rule.
While it is great that there are multiple protocols that are coming live, VASPs often are not sure which to support. We believe that with time protocols may merge or some may stop being in use. Until then, we choose to take an agnostic approach and support all major protocols, so that our customers are not faced with the difficult decision of picking one protocol over another.
For example, there were many electronic mailing messaging protocols before SMTP and IMAP became the standard. During that time, if you wanted to send an email to someone in another system, you needed a gateway. Years later, SMTP and IMAP became the standard due to their simplicity.
A complete FATF’s Crypto Travel Rule solution allows crypto businesses and financial institutions to:
A Travel Rule messaging protocol addresses only one of the seven components to full compliance. Messaging protocols still need to be integrated into a complete Travel Rule solution.
Since FATF launched its requirements, the crypto industry has already started several initiatives to solve the technical aspect of the travel rule. These consist of protocols built by industry alliance networks, closed groups of exchanges, and private companies as commercial offerings. While addressing the same challenge, the messaging protocols differ in terms of implementation requirements, how they solve discovery, governance models and costs of becoming members.
*Please note that TRNow is not a Travel Rule messaging protocol, rather a multi-protocol switch that enables the secure exchange of Travel Rule data with any counterparty VASP.
Messaging protocol vs. fully-integrated software providers
Interoperability with various protocols
Non-custodial wallet support
Notabene does not compete with TRP, OpenVASP, USTRWG, Sygna Bridge, TRISA, Shyft, Netki, or VerifyVASP. However, we integrate them into our end-to-end Travel Rule solution. Notabene customers can choose the best-fit protocols for their resources and technology needs. We assist them in onboarding into the protocol, where applicable, and managing the relationship with the protocols of their choice.
From there, we provide a multi-protocol switch that abstracts the protocol layer from everyday use. Notabene clients can send and receive Travel Rule compliant customer data to and from any VASP, protocol-agnostically.
Notabene provides a SWIFT-like trust and messaging layer on top of crypto transactions, enabling companies to collaborate and identify each others’ customers. We are committed to supporting the most widely used industry initiatives, including TRP, OpenVASP, USTRWG, Sygna, TRISA, Shyft, Netki, and VerifyVASP.
We provide an easy-to-use turn-key SaaS solution for Travel Rule support, allowing virtual asset service providers to comply with local and global AML regulations while maintaining their transaction flow. We additionally support companies in onboarding to their travel rule messaging protocol of choice.
The rest of the tools in our suite allow companies to: