A cryptocurrency exchange has become the first virtual asset service provider (VASP) to reaffirm its commitment to security and compliance by deploying a commercial Anti Money Laundering (AML) solution called CipherTrace Traveler.
The move comes as jurisdictions around the world are considering tightening regulation on cryptocurrencies.
The global Financial Action Task Force (FATF) published a rule back in June 2019 that is meant to replace Anti Money Laundering (AML) and Know Your Customer (KYT) efforts with a rule more appropriate for the crypto market.
The FATF is the body which will evaluate Malta’s Moneyval report to come to a conclusion on whether the country should be grey-listed.
Called the Travel Rule of Recommendation 16, all digital fund transfers creators and beneficiaries should exchange descriptive information. The rule will be applied to all VASPs, financial institutions, and mandatory organisations.
Virtual asset transfers must therefore provide information such as the name, account number, physical address, national ID number, customer ID number, date, and location of the creators and beneficiaries.
VASPs must therefore collect and store the necessary source and beneficiary information in order to send this information to beneficiary institutions.
Amidst all this, Crypto.com is working towards its objective of becoming fully compliant in all markets where the company operates.
It has aready been admitted into the International Digital Asset Exchange Association (IDAXA) and Global Digital Finance (GDF).
Now, it has become the first cryptocurrency exchange to announce the use of CipherTrace’s Traveler solution, the first commercial solution to enable compliance with global Anti-Money Laundering (AML) travel rule laws.
In March, CipherTrace released Traveler, anticipating increasing global enforcement of travel rule laws intended to prevent money laundering in cross-border cryptocurrency transactions.
Traveler is designed to support virtual asset service providers (VASPs), including cryptocurrency exchanges, custody providers, OTC trading desks, banks and other financial institutions, to achieve compliance with the local transpositions of the FATF’s travel rule recommendation.
Notably, the FATF recently updated its proposed guidelines to expand VASP due diligence requirements.
Traveler is able to help exchanges assess transaction risk and KYC weaknesses so they can take a risk-based approach to due diligence when onboarding counterparty VASPs.
CipherTrace CEO Dave Jevans said that, “The stakes are high for crypto companies when it comes to meeting compliance standards, with fees and even jail time on the line, and so we are very pleased to announce Crypto.com as the first client using our Traveler product to ensure compliance with global travel rule AML standards.”
He continued, “Traveler enables exchanges to overcome the sunrise issue, meeting their compliance obligations, even with VASPs in jurisdictions that have not yet codified travel rule guidance into local law.”
Antonio Alvarez, Chief Compliance Officer of Crypto.com, said that, “It is essential for cryptocurrency platforms to comply with laws and regulations globally, including AML standards, in order to promote and encourage mainstream adoption.”
“CipherTrace’s Traveler solution assures our partners and our customers that Crypto.com is in compliance with global guidelines, which are fundamental to the long-term viability of the cryptocurrency ecosystem.”
Traveler will make it easier for VASPs to meet the FATF’s new guidelines of sharing sensitive personally identifiable information (PII) to confirm cryptocurrency transactions in a secure and compliant manner.
Traveler simplifies the user experience by automatically identifying VASP-to-VASP transfers as well as the recipient VASP.
It also scans addresses associated with incoming cryptocurrency transactions and automatically verifies the originating VASP.
The new rules come into effect from 1st January 2024
The UK Government is considering rolling out more advanced scanners by mid-2024, sources told the BBC
The two facilities will give Maltese SMEs advantageous loan rates