- The Financial Action Task Force wants “urgent” implementation of its Travel Rule
- The Travel Rule has encompassed cryptocurrency since 2019
- The FATF recently found that “many” EU member countries have taken no steps towards implementation
The Financial Action Task Force (FATF) has criticized member countries for not implementing the Travel Rule that limits the value of cryptocurrencies individuals can send each other without information on both parties being collected. The FATF held a plenary session between June 21-23 which was attended by delegates from over 200 jurisdictions and in which it was revealed that “many” nations haven’t taken steps to implement the rules which the FATF says will help guard against money laundering through crypto.
Travel Rule Limits Anonymous Transfers
The FATF Travel Rule incorporated cryptocurrencies in 2019, a rule that demands that cryptocurrency-handling companies in EU member countries hold certain details for transfers above £1,000/€1,000 in value, including the recipients’ name, address, and account details. Transactions between two non-custodial wallets are exempt from the rule, with the FATF not overly concerned until users cash out their crypto.
Some countries such as The Netherlands have been proactive in enforcing the rules, but the FATF is clearly not happy with how the overall rollout is going:
Many jurisdictions have not yet implemented fundamental requirements, and more than half of survey respondents have not taken any steps towards implementing the Travel Rule, a key FATF requirement to prevent funds being transferred to sanctioned individuals or entities. This lack of regulation creates significant loopholes for criminals to exploit.
The FATF added that closing the gaps in global regulation of virtual assets is an “urgent priority” and called on all member countries to “apply the AML/CFT rules to virtual assets service providers, without further delay.”
EU Users and Exchanges Should Prepare
The FATF’s attitude won’t be good news for exchanges operating in the EU which don’t already follow these regulations, as several exchanges in the Netherlands have found out in recent years and which Binance recently discovered. This is despite the exchange implementing CipherTrace Traveler software for this exact reason in 2021.
Whether the authority has any clout will be evidenced in how countries respond, and the next couple of years may well see a wave of measures aimed at enforcing the travel rule within the EU.
