This includes secure Travel Rule information transfers between virtual asset service providers (VASPs), all the necessary KYC checks, AML screening and verification orchestration according to regulatory specifics and business needs. With this new solution from Sumsub, crypto platforms can rely on a third party for their compliance, along with shifting regulatory requirements and focus entirely on their core business goals and global expansion.
Designed to combat money laundering and terrorism financing, the Travel Rule extends FATF Recommendation 16 on wire transfers to virtual assets (VA) like cryptocurrencies and to Virtual Asset Service Providers (VASPs), so that the senders and recipients of all transfers must exchange identifying information, guarantee its accuracy and convey the data to government if required. In the wake of FTX’s demise, Kraken’s SEC troubles, and general turbulence across crypto exchanges, governments are moving to tighten regulations and provide clarity to the industry.
According to FATF, 29 of 98 countries have already passed Travel Rule legislation. In Hong Kong, the Travel Rule will impact business in June 2023, where crypto regulation will follow a framework similar to that of traditional finance. India has stated that regulating crypto assets is a priority, and now with its leadership of the IMF, that body has moved to work with the G-20 on crypto regulations.
In the UK’s money laundering law, Regulation 5 on crypto asset transfers comes into force in September 2023. The EU is rolling out its comprehensive Markets in Crypto Assets (MiCA) regulation, slated for enforcement in 2024. In the Middle East, Dubai has already set forth new crypto regulations covering issuance, exchange services and even crypto advertising. And recently, Japan announced that crypto transactions would be subject to the Travel Rule by May 2023.
Working with 500+ crypto clients since 2015, the company offers the crypto-focused Travel Rule Solution which offers secure data exchange between platforms, creating a compliant ecosystem for crypto providers.
Sumsub’s Travel Rule solution detects VASP-to-VASP payments, defines the receiving VASP, identifies account type, and checks for sanction violations, PEPs, and adverse media. As a result, the company helps crypto platforms to securely exchange and store customer information (including names, wallet addresses, etc.), making sure such data is not shared with third parties.
The solution can be combined with Sumsub’s advanced transaction monitoring (KYT) solution. KYT, or know-your-transaction, is a flexible set of procedures that usually includes analysing sender/receiver profiles, calculating risk scores and cross-checking KYC and transaction data. In this way, all parties of crypto transactions are protected from fraud.
Sumsub’s crypto customers can control the risk management process by setting rules to automate transactions with counterparties based on internal risk criteria. As a result, they can perform risk analysis based on up-to-date information and easily generate reports, if needed.
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