Gibraltar was the first country in the world to provide a purpose-built regulatory framework for businesses using blockchains or distributed ledger technology back in 2018. The travel rule was implemented through the Proceeds of Crime Act 2015 (Transfer of Virtual Assets) Regulations 2021 (TR Regs) and has been in force since March 22, 2021.
Gibraltar adopted a proactive and progressive approach to regulating the crypto industry by putting forward the Distributed Ledger Technology Framework (DLT Framework) as early as 2018. This framework regulates firms carrying out by way of business, in or from Gibraltar, the use of distributed ledger technology (DLT) for storing or transmitting value belonging to others.
Gibraltar's DLT Framework is founded on nine fundamental principles. One of which requires DLT providers to "have systems in place to prevent, detect and disclose financial crime risks such as money laundering and terrorist financing." The Gibraltar Financial Services Commission (GFSC) issued a Guidance Note tailored to support DLT providers in translating this principle into appropriate practices. DLT providers are subject to the obligations foreseen in the Proceeds of Crime Act (POCA) and to the Guidance Notes issued under POCA on systems of control to prevent the financial system from being used for ML/TF.
The GFSC is the authority responsible for regulating and supervising distributed ledger technology activities in Gibraltar, as part of its broad mandate to regulate and supervise the country's financial industry.
As part of its mandate to regulate and supervise distributed ledger technology activities in Gibraltar, the GFSC is responsible for monitoring compliance with the crypto travel rule. However, the Gibraltar Financial Intelligence Unit (GFIU) is the entity responsible for facilitating the receipt, analysis, and dissemination of suspicious transaction reports (STRs) filed by VASPs under the POCA.
Yes, "DLT Providers" in Gibraltar are required to apply with the GFSC for a DLT Provider License (see Financial Services (Distributed Ledger Technology Providers) Regulations 2017). Additionally, the Proceeds of Crime Act 2015 (Relevant Financial Business) (Registration) Regulations 2021 (RFBR Regs), which entered into force on March 22, 2021, requires (most relevantly) the following financial businesses to register with the GFSC for AML/CTF supervision, provided that they are not already subject to supervision by a relevant supervisory authority:
Yes, the crypto Travel Rule was implemented in Gibraltar through the enactment of the TR Regs, which has been in force since March 22, 2021.
Although the TR Regs do not explicitly grant any grace period for compliance with the crypto Travel Rule, a grace period of 18 months was communicated from the GFSC to the industry. The grace period was announced on March 22, 2021, and ends until September 22, 2022.
In Gibraltar, crypto travel rule requirements only apply to transactions with a value equal to or in excess of EUR 1,000 - defined as "material transactions" in the TR Regs (see section 3 .(1)). However, it is worth noting that the TR Regs explicitly foresee that this threshold may be modified by Government order.
In Gibraltar, the originator VASP is required to share the following personally identifiable information (PII) of the originator and beneficiary of the transfer with the beneficiary VASP (TR Regs, section 4.(2)):
In Gibraltar, the scope of personally identifiable information that needs to be shared between VASPs for compliance with the Crypto Travel Rule is the same for cross-border and internal transfers.
When receiving transactions from non-custodial or self-hosted wallets, Gibraltar requires beneficiary VASPs to obtain from their own customer (i.e., the beneficiary of the transfer) the following PII of the transfer originator (TR Regs, section 5.(2)):
When sending transfers to non-custodial or self-hosted wallets, VASPs are not subject to travel rule requirements.
Notabene's solution is live and can be used by VASPs to comply with local Travel Rule requirements today. Most relevantly, through Notabene, VASPs are able to identify whether the counterparty wallet is custodial or self-hosted and take the measures appropriate to each scenario. Complying with the Travel Rule requires significant changes to VASPs' existing UX and data flows. Bearing this in mind, we allow for a staggered implementation of our solution and promote testnets for VASPs to take their first steps towards compliance in a simulated environment.