FATF Travel Rule coming to Germany
As we discussed during our recent Tokyo FinTech Meetup on the travel rule, and especially the experience with the implementation in Switzerland, similar legislation was expected to be under way in the Netherlands, and Germany, among others. The German Ministry of Finance has now published a draft of these rules, which is open to public comment until June 14.
Lucas Betschart, Founder of travel rule-specialist 21 Analytics explained that the implementation of the Travel Rule in Switzerland as a first adopter led to the near cessation of cross-border crypto exchange (VASP — Virtual Asset Service Provider) to crypto exchange transfers as the counterparty is not yet obliged to follow the same rules under their respective domestic regulatory regime.
Cryptocurrency Transfer Ordinance
Draft bill of an ordinance of the Federal Ministry of Finance on increased duties of care in the transfer of crypto assets (Kryptowertetransferverordnung— KryptoTransferV) based on Section 15 (10) sentence 1 number 1 of the Money Laundering Act (GwG).
The Federal Ministry of Finance intends to order that the parties involved transmit information about the client and beneficiary when transferring crypto values so that — as with money transfers — the transactions can also be tracked with regard to the authorized persons in order to prevent misuse for money laundering or terrorist financing. In addition to the traceability of those involved in the transaction, this data transfer also enables a check for persons affected by sanctions and a more risk-oriented approach by the service providers involved. The proposal serves to implement the standards of the Financial Action Task Force (Recommendation 15 — Interpretative Note 7b, so-called “travel rule” for crypto values).
The ordinance also stipulates that information on the beneficiary or client of a crypto value transfer must be collected and stored if the transfer is from or to an electronic wallet that is not managed by a crypto custodian (self-managed electronic wallet, “unhosted wallet”). This also implements current FATF recommendations in this area. In addition, findings from this can also be relevant with regard to circumventing sanctions, e.g. in the area of proliferation financing.
Source: German Ministry of Finance
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