Crypto Travel Rule refers to new international regulations that largely prohibit transfer of cryptoassets unless accompanied by originator and beneficiary information.

From 1st of September 2013, you may not be able to send your cryptoassets unless you provide us with beneficiary, and in some circumstances also originator, information.

You can learn more about the Crypto Travel Rule by reading the rest of this article.

Also, keep an eye out for regular communications from us over the next few months as we lay out more details about how you will be expected to provide the required information in TrustVault.

You can always drop us a line at any time to ask any questions you may have.

Travel Rule is a common term for the FATF Recommendation 16 (R.16), which states that electronic fund transfers should be accompanied by recorded originator and beneficiary information. This recommendation has been adopted and enforced by over 200 jurisdictions i.e. every time you make an applicable transfer of money, behind the scenes banks exchange this information.

On 21st of July 2019, FATF clarified that cryptoassets are considered to be within scope of the recommendation, triggering jurisdictional enforcement legislation. Specifically for UK, HM Treasury’s Amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Statutory Instrument 2022 consultation concluded on 14th of October 2021, paving the way for Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022, which stipulates cryptoassets transfers regulations in Part 7A that comes into force on the 1st of September 2023.

The regulation requires UK cryptoasset businesses a.k.a. Virtual Asset Service Providers (“VASPs”), aka cryptoasset exchange providers and custodian wallet providers, to collect and record originator and beneficiary information before transferring cryptoassets. Additonally, when transferring cryptoassets to a beneficiary’s wallet that’s hosted by another cryptoasset business, instead of to an unhosted wallet, to transmit that information onto that cryptoasset business.

How you will supply the required information to us, such as originator and beneficiary names and account numbers, will depend on which user interface you use. Please note that we have not yet finalised designs, so at this point we will discuss current thinking, subject to change, based on our learnings and your feedback.

We envisage web users being able to supply required information via an updated “New Transaction” form. The form will be extended to allow for input of the required information.

We also aim to extend our address book to allow storage of the required information alongside existing data, so that when you select an address book entry, the details are auto-populated.

We anticipate that it may not always be possible to supply all of the information right away, or sometimes the information may need to be corrected. So we are looking at adding a “Pending Transactions” list view where you will be able to see and edit all of the outbound transactions that are missing the required information. Once all of the required information is supplied, the transaction will be sent to the iOS device for approval as is the case today.

We are also considering how the list may be extended to additionally include inbound transactions that we have received and delayed making available to you, as we have not yet received the required information from the originator’s cryptoasset business.

For MetaMask users, we are thinking that we will be not changing the extension user interface, but placing applicable transactions into the “Pending Transactions” list. In such a flow, users will create a transaction in MetaMask, add required information to the transaction in the “Pending Transactions” list via web, and approve the transaction in the iOS app.

We expect to offer our API users the ability to include required information either during transaction creation, or append the information to an existing transaction before it is submitted to blockchain.

At the very least, before sending less than 1000 EUR worth of your own cryptoassets to a self-hosted wallet, you will need to supply us with the following beneficiary information:

When sending your own assets, we can use information you supplied to us during onboarding to automatically populate the originators information, saving you time.

If, on the other hand, you are a cryptoasset business yourself, and are transferring your client’s assets, then you will also need to supply us with your customer’s originator information, which has the same data requirements as the beneficiary information.

As a cryptoasset business, you should be able to extract the originator information from the information your customers supplied to you during their onboarding with you. As for beneficiary information, you can request your customers to supply it to you as part of the transfer instruction. You will then be in a position to pass both the originator and beneficiary information on to us.

When transferring cryptoassets to a cryptoasset business hosted wallet e.g. transferring to a crypto exchange or on to a custodial wallet, you should also specify the name of the hosting cryptoasset business. This is not a legal requirement, however, not supplying this information to us may result in cryptoassets being returned.

This would be the case if for example we would classify a transfer as one to a self-hosted wallet due to lack of host information. As such, we would capture the information, but not send it on to the beneficiary’s cryptoasset business.

When the beneficiary’s cryptoasset business receives the cryptoassets, they will have to delay making the cryptoasset available to the beneficiary, as they would not have the necessary originator and beneficiary information. They may ask the beneficiary to identify the originator’s cryptoasset business and contact them, or they may simply choose to send the cryptoassets back.

Also, the transfer’s beneficiary’s cryptoasset business has the right to request additional originator information from the originator’s cryptoasset business; or if the transfer exceeds 1000 EUR, then the additional originator information must be included in the first place. The following extra data is required:

Table below summarises the above described information requirements:

References:

MLTFR 2022. The Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022. Published July 21, 2022.

HM Treasury 2021. Amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Statutory Instrument 2022 July 2021 | Consultation. Published July 22, 2021.

HM Treasury 2022. Amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Statutory Instrument 2022 | Response to the Consultation. Published June 2022.