Tether tests Notabene for AML in cross border transactions
The Financial Action Task Force (FATF) has issued guidelines holding VASPs to the same standards as regulated financial institutions.
Tether has announced it will start using Notabene, an end-to-end solution designed for crypto Travel Rule compliance, in order to combat money laundering and crime in cross-border VASP-to-VASP transactions.
The company powers the largest stablecoin by market capitalization and must be on top of its game always because AML failures risk upsetting regulators.
Tether has just been fined $41 million by the CFTC and $18.5 billion by the New York Attorney General Office for failing to back the stablecoin in a 1:1 ratio and making false statements about it.
The legal nightmare is not over yet as the US Justice Department is looking to go after Tether executives for bank fraud.
If Tether wants to remain the largest stablecoin in the world it can’t repeat past mistakes nor make new ones. To that effect, the blockchain platform is enhancing its AML capabilities with Notabene’s protocol-agnostic solution. Notabene will assist Tether in managing counterparty risk.
For now, the partnership is limited to testing the AML solution. Notabene will enable Tether to test complex crypto use cases in a collaborative, low-risk environment, and see how it can send other VASPs the required identifying information in respect of its customers in a secure manner.
The Financial Action Task Force (FATF) has issued guidelines holding VASPs to the same standards as regulated financial institutions.
The “Travel Rule” recommends that VASPs should transmit specific customer data between counterparties for transactions over a certain threshold in order to combat money laundering, terrorist financing, and abide by sanctions measures.
Leonardo Real, CCO of Tether, said: “It’s important that we work with other large VASPS to build this industry from the ground up. As pioneers of blockchain technology and leaders in transparency, we are dedicated to not only keeping up with new rules but helping shape them.
“Because the Travel Rule traditionally applies to financial institutions, we see this as an opportune moment to foster cooperation across traditional and digital channels in order to create better services for customers globally. We are proud to lead the charge on behalf of all stablecoins in order to make a positive change towards protecting our clients.”
Pelle Braendgaard, CEO of Notabene, said: “Tether’s stablecoin has rightfully cemented its role as a core part of the global crypto industry. Notabene is excited to help Tether bring out FATF crypto Travel Rule compliance across its global network, leading to a safer and more regulatory compliant crypto world.”
Upon successful testing, Tether is expected to integrate Notabene’s solution.
