Skip to content

FATF meeting to discuss VASP compliance with Travel Rule

June 8, 2020

The Financial Action Task Force (FATF) has scheduled a plenary session on June 24 to assess the progress of the Virtual Travel Service Providers (VASP) implementation of the “Travel Policy” worldwide.

According to Pawel Kuskowski in Forbes, the FATF meeting will take place in practically two weeks to discuss the organization’s guidelines.These guidelines are designed to ensure that the VASP complies with anti-money laundering (AML) and terrorist financing (ATF) regulations.), he says that the jurisdictions of FATF members “must demonstrate progress” in implementing the travel rule as their efforts will be reviewed at the June 24 meeting.

Background of travel rule

In June 2019, the FATF urged global regulators to adopt their AML guidelines for cryptocurrencies. These guidelines have become known as the “Travel Policy” and offer a range of AML and ATF exchanges to prevent the AML from being used illegally.

FATF meeting to discuss VASP compliance with Travel RuleFATF meeting to discuss VASP compliance with Travel Rule

The FATF said it would “monitor the implementation of the new requirements by countries and service providers and conduct a 12-month review in June 2020” to give the cryptocurrency community a year to catch up.

As Cointelegraph reported, the guidelines are not legally binding. However, they can be effective. Any nation that does not meet them within the specified time limit can be excluded from the global financial network.

Only 10% of countries adhere to it

Cointelegraph spoke CoolBitX’s Chief Executive Officer (CEO) Michael Ouwhose company is developing Technology for specific compliance with the travel rule.

According to Ou, Of the more than 200 countries that make up the FATF, “only about 20 have issued regulations that cover the travel rule”.However, the CEO said that The rest of the countries are making “significant progress”This will be discussed at the meeting scheduled for June 24th.

Ou wait that the plenary session is likely to take place so that the FATF simply repeats its expectations of member countries regarding these guidelines. “This will result in more VASPs working in any jurisdiction to meet a defined deadline to meet them.”said the CEO.

“There are currently only a small handful of VASPs that meet the guidelines,” said Ou. I express that I expected this number to “increase exponentially before the end of the year”.

Others in the industry don’t see this coming soon. XReg consultant Siân Jones argued that it could take “a few years” for all participating nations to implement the travel policy guidelines.

“The problem of dawn”

VASPs in the participating countries not only have to comply with the same guidelines, but also expect the travel rule to come into force at different times in different countries.According to Ou, each jurisdiction could interpret the guidelines differently.

“There are currently several travel rule solutions on the market, each of which requires care and proper application.”said Ou, “If it stays until later, the stock exchanges run counterclockwise. “

CoolBitx developed its own solution for the FATF guidelines called Sygna Bridge, which went into operation in April. With this solution, exchanges can communicate the identity of the sender and recipient of each transaction.