In 2021, the Philippines joined the Asia-Pacific Group and became a member of FATF-Style Regional Bodies. The same year, Bangko Sentral NG Pilipinas (BSP), the country’s Central Bank, released Circular 1108 to provide guidelines for Virtual Asset Service Providers (VASPs), which included the Travel Rule.
With that, the FATF Travel Rule went into effect in February 2021 in the Philippines. As a result, crypto exchanges and service providers are now all required to follow the Philippines Crypto Travel Rule.
This year, the Philippines has begun tightening Travel Rule requirements even further to strengthen the country’s AML and CFT measures against any illicit crypto transactions.
A VASP, according to BSP, is any entity that offers services facilitating the transfer or exchange of virtual assets and is involved in the following activities:
According to the country’s Central Bank, VASPs must share the following information with their corresponding VASPs for all crypto transactions, irrespective of the amount:
However, the extent of personally identifiable information that VASPs have to collect and share with their corresponding VASPs increases substantially when the amount of crypto transaction exceeds ₱50,000 (about $893).
In such cases, VASPs are required to collect and share the following information:
Additionally, originating and beneficiary VASPs must establish and actively adhere to strict sanction screening procedures. They must also screen all transacting parties against terrorist financing lists and adverse media reports.
Moreover, VASPs must perform necessary due diligence on the transfer of virtual assets to and from countries that haven’t implemented the FATF Travel Rule yet. They also have to exercise caution and perform enhanced due diligence when dealing with crypto transfers using unhosted wallets.
The Travel Rule is part of a broader set of recommendations by the global anti-money laundering watchdog, the FATF, which included the Philippines in its ‘grey list.’ As a result of this, Southeast Asian countries like the Philippines have increased monitoring in order to maintain their trade relations and gain access to international finance.
Countries like the United Arab Emirates and Hong Kong have already taken similar action and tightened up regulations on the sector.
Meanwhile, several countries such as Singapore, Switzerland, Estonia, South Korea, Canada, Japan, the US, and the UK have also adopted the Crypto Travel Rule and require digital asset service providers to maintain customer information and establish procedures to ensure compliance with AML/CFT measures.
The Philippines’ Travel Rule threshold is in line with the FATF’s $1,000 limit and more or less in conformity with other countries. In Singapore, the threshold for collecting and recording sender and receiver information is SGD 1,500 (about $1,115), while in the United States, it's $3,000. However, in Estonia and Malaysia, there's no minimum amount requirement for gathering this information.
While the Philippines has taken significant steps to align with international standards by implementing the FATF Travel Rule for cryptocurrency transactions, these regulations have sparked a debate about their impact.
By setting requirements for VASPs to collect and share detailed information on transactions, the country aims to combat money laundering and terrorism financing. However, the increasing regulatory measures, including the latest tightening of the Travel Rule, highlight the ongoing tension between ensuring financial security and maintaining cryptocurrency's open, decentralized ethos.
This delicate balance continues to shape the landscape of crypto regulation both in the Philippines and around the world. Amid this, it's crucial for both regulators and industry representatives to remember that user security and experience should always be a priority.
They must collect and exchange personal information for transactions exceeding ₱50,000 (about $893).
Entities that facilitate the transfer or exchange of virtual assets, including exchanges between cryptocurrencies and fiat currencies.
They may face regulatory penalties, including fines and revocation of their operating license, for non-compliance with the BSP's guidelines.
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