The Financial Action Task Force (FATF) adopted a new data-sharing requirement for virtual asset service providers (VASPs) in June 2019. The Recommendation 16 update, referred to as the FATF Travel Rule in recognition of its close resemblance to the U.S.’ BSA Travel Rule, covers cross-border and domestic wire transfers, with the objective of addressing the emerging use of cryptocurrencies in money laundering and terrorism financing. Through the travel rule, law enforcement agencies can more effectively monitor those who facilitate illicit activities through digital assets.
Under the FATF Travel Rule, virtual asset service providers (VASP), financial institutions, and other platforms that facilitate the transfer of assets are obliged to share information of their users with each other. In addition, these institutions, both the originator and the beneficiary in any particular transfer, are responsible for making sure that the information they share is accurate.
The FATF travel rule is currently under its second 12-month review period and countries are expected to ensure their VASPs have implemented it by June 2021.