It's official! EU Transfer of Funds Rule Endorsed by EU Parliament

The EU Parliament has, on 20 April 2023 endorsed the information accompanying transfers of funds and certain crypto-assets (recast) or more commonly known as the Transfer of Funds Rule (TFR). This was endorsed with a 529 to 29 vote alongside the vote for MiCA regulations, which all VASPs (or CASPs as they are referred to in EU regulations), domiciled in the EU should be licensed in accordance with.

CASPs have up to January 2025, when MiCA and TFR are expected to go live, to prepare and comply with the new regulations. We summarise the requirements below.

• Counterparties outside the EU should be viewed as correspondent relationships similar to that of traditional finance and due diligence on the counterparty should be conducted in advance of any transactions. This should include assessments on AML/CFT risks and GDPR compliance.
• Travel Rule submissions should be done prior to the blockchain transfers, immediately and securely
• Travel Rule information is done for all transactions regardless of amounts, however, verifications on accurate data need to be conducted for transfers (or grouped transactions) amounting to more than EUR 1000
• Required information, besides both the standard originator and beneficiary name, distributed ledger address plus originator’s official address, including country and LEI where applicable for both originator and beneficiary
• Transactions with self-hosted wallets in excess of EUR 1000 should be done with the same party only
• Intermediary VASPs such as custodians need to ensure that there is Travel Rule information accompanying each transaction or retain the data if they come to possess it
• Any data sharing should be in compliance with GDPR standards and no submission (or transfers) can be executed without ensuring compliance with GDPR standards (more guidelines are expected from the European Data Protection Board)

VerifyVASP technology and processes are architected according to GDPR standards and we facilitate counterparty due diligence by conducting our own initial assessments on members. Our API-based, decentralised design ensures immediate, secure, scalable transmission and compliance with Travel Rule regulations.

Contact us at corporate@verifyvasp.com or watch this space. As we are looking to conduct country-level working groups to develop industry best practices for complying seamlessly with Travel Rule and maintaining the frictionless nature of blockchain transactions.