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In 2019, the Financial Action Task Force (FATF), an intergovernmental organization focused on preventing money laundering and other malicious financial activities, set its sights on crypto. The FATF proposed that the Travel Rule, a requirement for regulated firms to collect and share participants' personal data in financial transactions, should now apply to what they defined as Virtual Asset Service Providers (VASPs).
A VASP is a cryptocurrency exchange, liquidity provider or custodian, centralized or decentralized. According to the FATF recommendations, VASPs are required to collect personal data on participants in financial exchanges exceeding USD/EUR 1,000. Some countries have lowered the threshold to zero.
For the VASPs subject to FATF’s latest Recommendations and the Travel Rule, identifying info such as names and account numbers of transacting parties (senders, recipients) is now required to be “in compliance” as these recommendations are implemented into local regulations on a country-by-country basis.
Veriscope, Shyft Network’s Travel Rule solution, was developed to grant VASPs a decentralized solution for complying with global regulations, such as the FATFs Travel Rule. Veriscope allows VASPs to be Travel Rule-compliant by enabling them to automatically discover which VASP (an exchange, liquidity provider or custodial wallet) is the recipient of crypto assets sent by their customers. Then, Veriscope enables VASPs to transmit the required customer data to each other to ensure that their customers are not involved in money laundering, sanctions evasion, or other illicit activity. Veriscope automates the discovery of VASP details on-chain and the secure and authenticated exchange of customers’ private data.
Veriscope’s seamless approach protects customers and empowers local and global VASPs to be compliant when processing transactions regardless of when their counterparty VASPs agree to start using a Travel Rule solution or where they operate across the world.Want to find out more on FATF Travel Rule: fatf-gafi.org