August 17, 2023

FATF Travel Rule Myths Debunked

FATF Travel Rule Myths Debunked

The growing adoption of cryptocurrencies globally and more countries adopting the FATF Travel Rule (TR) is sparking numerous discussions, particularly among financial institutions and Virtual Asset Service Providers (VASPs). But just like with any regulatory guideline, there are many misconceptions. Looking into some of the most common FATF Travel Rule myths, with this article, we aim to demystify them and reveal the true value of TR.

Myth #1: The Travel Rule Mandates a Specific Technology

Debunked: The FATF does not specify a particular technology for implementing the Travel Rule. Each jurisdiction and VASP can choose the most suitable technology for compliance as long as they meet the requirements. 

However, for VASP’s own benefit, they must choose a fully automated solution with no third-party storage to process the Travel Rule data, such as Shyft Veriscope. 

More on Shyft Veriscope here: Shyft Veriscope - The Critical Infrastructure Underpinning FATF Travel Rule

Myth #2: Only Large Transactions are Covered

Debunked: The Travel Rule applies to transactions above a specific threshold, which varies by jurisdiction. However, this threshold can be relatively low in many countries, ensuring a broad range of transactions are captured. For example, under MiCA, the Travel Rule threshold for crypto transactions is zero euros, whereas, in the United States, the threshold is $3000. 

Myth #3: Personal Data Must be Stored Indefinitely

Debunked: While the Travel Rule requires certain data to be retained, it doesn’t mandate indefinite storage. The retention period is typically five years, although this may vary by jurisdiction. 

Interestingly, in the recent FATF report on the targeted implementation of the Travel Rule, the global watchdog identified a Travel Rule Solution's capability to store data for five years as one of the key factors VASPs must consider when assessing available compliance solutions.

Interesting read: Addressing the new FATF Report - Shyft Veriscope Solving the Travel Rule Challenges Like No Other

Myth #4: Peer-to-Peer (P2P) Crypto Transfers are Exempt

Debunked: P2P transfers between non-custodial wallets are indeed more challenging to regulate. However, when a VASP facilitates such transactions, the Travel Rule will still apply.

Myth #5: The Travel Rule is Universally Enforced

Debunked: Implementation and enforcement of the Travel Rule vary by country. While the FATF provides recommendations, it's up to each member country to adopt and enforce the guidelines according to their domestic legislation.

Myth #6: Complying with the Travel Rule is too Costly for Small VASPs

Debunked: While compliance does have associated costs, there are a variety of solutions at different price points. For example, Shyft Veriscope is among the most cost-effective Travel Rule solutions for both the small and growing VASPs as well as large and well-established VASPs. 

Schedule a demo and contact Shyft Veriscope’s BizDev team for more details. 


VASPs need a Travel Rule Solution to comply with the FATF Travel Rule. Have you zeroed in on it yet? Check out Veriscope, the only frictionless crypto Travel Rule compliance solution. 

Visit our website to read more, and contact our team for a discussion.

Follow us on X (Formerly Twitter), LinkedIn, Telegram, and Medium for up-to-date news from the world of crypto regulations. To keep up-to-date on all things crypto regulations, sign up for our newsletter.