VerifyVASP Successfully Completes Independent Assessment of Responses to FATF Travel Rule Guiding Questions

It’s been a rocky road to Travel Rule compliance. Regulators have started to implement and enforce legislation and the Financial Action Task Force (FATF), together with G20 countries, have called for accelerated adoption in order to bolster AML/CFT efforts globally.

In June 2023 the FATF issued the Targeted Update on Implementation of the FATF Standards on Virtual Assets and Virtual Asset Service Providers. Within this update featured a review of the implementation of technical solutions available to fulfil the Travel Rule, per FATF Recommendation 16.

In this update, the FATF published an alarming list of the shortcomings observed in existing Travel Rule compliance tools which is often cited as a inhibiting factor to full Travel Rule compliance.

One of the observations made by FATF was that in certain instances, messages are not getting to the right counterparty. This observation is significant as it gives rise to data protection issues caused by sensitive personal information being sent blindly to a third party. Unless resolved, it will create friction in blockchain transfers and ultimately fail in meeting the objectives of the Travel Rule.

This list of shortcomings was supplemented by very useful feedback to the industry: Box 2.2 on page 25 of the documents entitled “Guiding Questions for Travel Rule compliance tool providers”.

Although the questions are helpful, any response (to these guiding questions) from a Travel Rule solution provider should be validated against their production traffic on actual implementations to demonstrate the ability to comply to FATF and respective requirements of various jurisdictions. As it has been observed in many implementations, Travel Rule being a messaging requirement requires a lot of coordination and hands-on experience in order to ensure exchanges of information are successful. Note that the data protection mention in the Guiding Questions relates to data retention only.

VerifyVASP, having successfully processed over 6 million immediate and secure data submissions and verifications as of December 2023, took the initiative to answer each question below and to have our responses reviewed by a Big Four audit firm globally recognized as an unequivocally trusted third party.

After a careful assessment of our responses, the review did not identify any inconsistencies between VerifyVASP’s actual production implementation and our below answers to these questions.

If you would like access the full report, or discuss how we can help you comply with Travel Rule requirements, please contact corporate@verifyvasp.com.