Starting on 1 September 2023, Sumsub is launching a six-month free trial of its Travel Rule compliance solution, coinciding with the United Kingdom's enforcement of the Crypto Travel Rule legislation. This move is aimed at countering money laundering and terrorism financing in the global cryptocurrency space.
The initiative extends the reach of the Financial Action Task Force's (FATF) Recommendation 16 to encompass virtual assets (VAs), including cryptocurrencies, and Virtual Asset Service Providers (VASPs). According to the Travel Rule, all parties involved in VA transfers must exchange identifying information, ensure its accuracy, and share this data with relevant government authorities as required.
Sumsub initially unveiled its Travel Rule solution in March 2023, facilitating secure information transfers between VASPs in adherence to compliance standards. This allows crypto firms to both send and receive Travel Rule messages for corresponding transactions.
During the free trial period, users will have access to a unified console, enabling the creation of up to 10,000 outbound transactions, unlimited processing of inbound transactions, complimentary Anti-Money Laundering (AML) checks, and the setup of an unlimited number of rules that reflect each client's regulatory and business needs. Additionally, Sumsub intends to offer premium and enterprise plans with higher limits on outbound transactions and additional functionalities.
The introduction of Sumsub's Travel Rule solution is aimed at enhancing compliance and preparedness for forthcoming global regulations, such as the European Union's Transfer of Funds Regulation (TFR) and Markets in Crypto-Asset (MiCA) regulations, scheduled for enforcement in 2024. Sumsub's extensive ecosystem already encompasses over 1,000 crypto businesses, including more than 500 VASPs.
According to Sumsub, the cryptocurrency industry has experienced a surge in Anti-Money Laundering (AML) fines, amounting to nearly USD 5 billion by the end of 2022. A significant portion of these fines resulted from inadequate implementation of identity verification and Know Your Customer (KYC) processes.
The implementation of the Travel Rule in the cryptocurrency sector aims to improve transparency and accountability in digital asset transactions, aligning regulatory frameworks more closely with traditional finance. Amid recent market turbulence and challenges faced by major crypto exchanges, governments worldwide are taking decisive actions to strengthen regulations and provide clarity to this evolving industry.
As of June 2023, the FATF has evaluated the implementation of the Travel Rule as "relatively poor," with around three-quarters of jurisdictions demonstrating only partial or non-compliance, as indicated in several evaluation and follow-up reports. Notably, Japan and Hong Kong have already enforced the Travel Rule for crypto transactions, with Portugal following suit in July. Lithuania is scheduled to implement the Travel Rule in 2025. In the United States, the Travel Rule applies to VA transactions exceeding USD 3,000.
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