The European Banking Authority (EBA) has issued guidelines on the “Travel Rule” – information that should accompany transfers of funds and certain crypto assets – designed to combat the misuse of such transfers for money laundering and terrorist financing purposes.
The goal is to have a consistent and effective approach to implementing the Travel Rule across the EU, enabling the relevant authorities to fully trace such transfers where necessary to prevent, detect and investigate money laundering and terrorist financing.
The new guidelines will come into effect on December 30, 2024.
The Guidelines repeal, as of 30 December 2024, the Joint Guidelines under Article 25 of Regulation (EU) 2015/847 on the measures that payment service providers should take to detect missing or incomplete information about payers or payees and the procedures that payment service providers should implement to manage the transfer of funds where the required information is missing.
The EBA is responsible for issuing guidelines to competent authorities, PSPs and CASPs:
(a) the measures that the provider must take to comply with the specific provisions of Regulation (EU) 2023/1113;
(b) Technical aspects of the application of this Regulation to credit transfers
(c) Measures, including standards and procedures, for identifying and verifying the identity of the sender or beneficiary of a transfer to or from a self-hosted address.
The ‘Travel Rule’ guidelines stipulate that:
It lists what information must accompany a transfer of funds or crypto assets, the steps that payment service providers (PSPs), intermediary PSPs (IPSPs), crypto asset service providers (CASPs) and intermediary CASPs (ICASPs) must take to detect missing or incomplete information, and the steps that they must take if information required for a transfer of funds or crypto assets is missing.
In June 2023, Regulation (EU) 2023/1113 came into force, bringing the EU legal framework into line with the Financial Action Task Force (FATF) standards by expanding the obligation to include information on remittance origins and recipients in CASPs (the so-called “travel rule”).
The deadline for competent authorities to report on compliance with the guidelines is two months after the publication of the translations into the official languages of the EU. The revised guidelines will apply from 30 December 2024.
The EBA has also issued guidelines on risk-based AML/CFT supervisors of crypto asset service providers (CASPs) and guidelines for crypto asset service providers to effectively manage their exposure to ML/TF risks, and is currently finalizing work on guidelines on internal policies, procedures and controls for compliance with restrictive measures applicable to CASPs and other financial institutions.
Sumsub publishes “Learning to Follow Travel Rules”
Sumsub and Mercuryo jointly published a paper titled “Mastering Travel Rule Compliance” that aims to provide guidance to Virtual Asset Service Providers (VASPs).
Designed to assist cryptocurrency businesses in understanding and implementing the Travel Rule, ensuring compliance and supporting their business growth, the guide is particularly timely given that a recent FATF survey revealed that 35 out of 135 jurisdictions have already enacted Travel Rule legislation, with the European Union due to follow suit by December 30, 2024.
VASPs must respond to growing global efforts to integrate cryptocurrencies within the regulated financial system and ensure a safe, transparent and compliant environment. This guide addresses regulatory complexities and provides practical solutions to comply with regulations while minimizing costs and risks.
The Travel Rule, established by the Financial Action Task Force (FATF), requires financial institutions involved in virtual asset transactions to collect and share personal information of both senders and recipients. This regulation is a key component of Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) efforts. It is essential for VASPs and financial institutions to adhere to these guidelines in order to remain compliant, avoid fines, and maintain their licenses.
