VerifyVASP Verifications Exceed USD 150 Billion

VerifyVASP has reached a new milestone, successfully processing verifications representing over USD 150 billion of assets through its network as of June 2024.

This exponential growth is largely attributable to increased demand from virtual asset service providers (VASPs) to demonstrate Travel Rule compliance at the transaction level, resulting in higher numbers of verifications processed as an ever-growing number of jurisdictions begin to enforce the Travel Rule.

Regulators and VASPs increasingly understand that demonstrating Travel Rule compliance at the transaction level entails specific best practices depending on the role that a VASP plays in the transfer:

Ordering VASPs need to

1. Identify their counterparty VASP and conduct due diligence to avoid dealing with illicit actors or sanctioned actors unknowingly. Due diligence helps to determine whether the counterparty VASP can reasonably be expected to protect the confidentiality of information shared with it.
2. Obtain assurance that the declared beneficiary information is consistent with the beneficiary VASP’s records (this requirement of trusting the counterparty VASP’s records underpins the need for counterparty VASP due diligence per Points 1 and 2). Beneficiary verification was one of the key points proposed in the Financial Action Task Force’s Public Consultation on Recommendation 16 on Payment Transparency.
3. Perform name screening on the beneficiary.
4. Submit Travel Rule information to the beneficiary VASP or financial institution immediately and securely only after the above points are completed.

Beneficiary VASPs need to

1. Identify their counterparty VASP and conduct due diligence to avoid dealing with illicit actors or sanctioned actors unknowingly.
2. Verify that the communicated beneficiary information from the ordering VASP matches the details of an existing customer on record (to avoid the risk of a false negative name screening result, colloquially referred to as the “Mickey Mouse” problem where Mickey Mouse, whilst not a real customer of a VASP, does not trigger a red flag name screening response).
3. Perform name screening on the originator.
4. Credit the assets to the beneficiary account only after the above points are completed.

Intermediary VASPs need to ensure that all required originator and beneficiary information accompanying a VA transfer is retained with it.

All VASPs must identify suspicious transactions, take freezing actions, and prohibit transactions with designated persons and entities. They must maintain records securely and make information available to appropriate authorities upon request.

Drivers of Growth

VerifyVASP’s leading position is a reflection of its dedication to comprehensive compliance with Travel Rule regulations as detailed in our Lessons Learned from Travel Rule Compliance article:

1. Members of the VerifyVASP alliance can benefit from a significant head-start in conducting their own mandatory counterparty VASP due diligence by leveraging the extensive due diligence that we undertake on all our members as part of our onboarding and ongoing due diligence process (subject to consent).
2. TravelRule is VerifyVASP’s industry-proven and audited solution for counterparty VASPs that are both Travel Rule obliged (i.e. Legal entities of VASPs established in jurisdictions that already enforce Travel Rule regulations).
3. VASPs still operate in a fragmented global landscape, and the sunrise issue complicates compliance when one of the counterparties is located in a non-Travel Rule obliged jurisdiction, as it can be implied that non-Travel Rule obliged VASPs do not have the legal basis to receive personally identifiable information (PII). Our enhanced risk mitigation measure, VerifyName, can help to verify beneficiaries in obliged-to-non-obliged VASP transfers without breaching legal basis, thus allowing for important client use cases.

Our latest milestone reaffirms the effectiveness of VerifyVASP in the context of the Guiding Questions for Virtual Asset Service Providers (VASPs) as outlined in FATF’s Targeted Update from June 2023.

Please get in touch if you would like help in meeting your Travel Rule requirements at corporate@verifyvasp.com.