The European Banking Authority (EBA) has issued guidelines on the ‘Travel Rule’ – the information that should accompany transfers of funds and certain crypto assets- which is designed to tackle the abuse of such transfers for money laundering and terrorist financing purposes.
The goal is to establish a consistent and effective approach to implementing the travel rule across the EU that allows relevant authorities to fully trace such transfers where this is necessary to prevent, detect, or investigate money laundering and terrorist financing.
New guidelines come into force 30 December 2024
These Guidelines repeal with effect from 30 December 2024 the Joint Guidelines under Article 25 of Regulation (EU) 2015/847 on the measures payment service providers should take to detect missing or incomplete information on the payer or the payee, and the procedures they should put in place to manage a transfer of funds lacking the required information.
EBA is in charge of issuing guidelines to competent authorities, PSPs, and CASPs on:
(a) the measures those providers should take to comply with certain articles of Regulation (EU) 2023/1113;
(b) the technical aspects of the application of this Regulation to direct debits;
(c) the measures, including the criteria and means for identification and verification of the identity of the originator or beneficiary of a transfer made to or from a self-hosted address.
The ‘Travel Rule’ guidelines specify:
- which information should accompany a transfer of funds or crypto assets
- list the steps that payment service providers (PSPs), intermediary PSPs (IPSPs), crypto-asset service providers (CASPs), and intermediary CASPs (ICASPs) should take to detect missing or incomplete information,
- what they should do if a transfer of funds or a transfer of crypto-assets lacks the required information.
In June 2023, Regulation (EU) 2023/1113 entered into force and brings the EU’s legal framework in line with the Financial Action Task Force (FATF)’s standards by extending the obligation to include information about the originator and beneficiary to CASPs – the so-called ‘travel rule’.
The deadline for competent authorities to report whether they comply with the Guidelines will be two months after the publication of the translations into the official EU languages. The amending Guidelines will apply from 30 December 2024.
The EBA also published Guidelines on risk-based AML/CFT supervisors of crypto-asset service providers (CASPs) and Guidelines crypto-asset service providers to effectively manage their exposure to ML/TF risks, and is currently finalising the work on Guidelines on internal policies, procedures and controls to comply with restrictive measures that apply to CASPs as well as other financial institutions.
Sumsub published “Mastering Travel Rule Compliance”
Sumsub and Mercuryo have together published a paper titled “Mastering Travel Rule Compliance” aimed at providing guidance to Virtual Asset Service Providers (VASPs).
Designed to aid cryptocurrency businesses in understanding and implementing the Travel Rule to ensure compliance and support business growth, the guide is particularly timely as the FATF’s recent survey revealed that 35 of 135 jurisdictions have already enacted Travel Rule legislation, with the European Union set to follow by December 30, 2024.
VASPs need to respond to the growing global commitment to integrating cryptocurrency within regulated financial systems and ensuring a safe, transparent, and compliant environment. The guide addresses the complexity of the regulation and provides practical solutions to stay compliant while minimizing costs and risks.
The Travel Rule, established by the Financial Action Task Force (FATF), mandates that financial entities involved in virtual asset transactions collect and share personal information of both senders and recipients. This regulation is a critical component of anti-money laundering (AML) and counter-terrorism financing (CTF) efforts. It is essential for VASPs and financial institutions to adhere to these guidelines to remain compliant, avoid penalties, and retain their licenses.
