Everything you need to know about Travel Rule

Unlike traditional financial system transactions having tagged with a bank account or name, cryptocurrency transaction records are hashed whenever it transacts between 2 wallet addresses which effectively preserves the privacy of both parties. Hence, concerns were raised with the potential for illicit use cases with cryptocurrency due to its anonymous nature.

As cryptocurrency becomes more popular, the need for Anti Money Laundering and Counter Financing Terrorism (AML-CFT) measures becomes highly essential.

What is the FATF Travel Rule?

The Financial Action Task Force (FATF), is an international organization that spearheads AML-CFT efforts on a global scale, ensuring implementation of legal, regulatory, and operational measures.

The Travel Rule was introduced by TAFT which will impact Virtual Asset Service Providers (VASPs) and the cryptocurrency industry in general. Essentially, it is an initiative that requires financial institutions to share information about their customers and assume the responsibility to report suspicious activities.

In this case, VASPs are now required to disclose customer information when facilitating a transfer of cryptocurrencies of 1,000 USD or higher. The requested information covers both the sender’s and recipient’s…