Overview of the Travel Rule
The Travel Rule mandates that payment service providers (PSPs) and crypto-asset service providers (CASPs) collect and transmit specific information about the originator and beneficiary of funds or crypto transfers. This aligns the EEA with global standards set by the Financial Action Task Force (FATF) 212.
- Objective: Enable authorities to trace transfers for ML/TF investigations and prevent abuse of financial systems.
- Scope: Applies to both traditional funds transfers (e.g., bank wires) and certain crypto-asset transactions 212.
Key Requirements - Information to Accompany Transfers
For funds transfers:
- Originator’s name, account number, address, and date/place of birth (for cross-border transfers).
- Beneficiary’s name and account number 212.
For crypto transfers:
- Originator’s name, wallet address, and national identity number or birthdate.
- Beneficiary’s name and wallet address 212.
Compliance Steps
- Detection: PSPs and CASPs must screen transactions for missing/incomplete data.
- Action: If information is lacking, providers must:
- Reject the transfer.
- Request additional details from the originator.
- Report suspicious activity to authorities 212.
Regulatory Framework
- Legal Basis:
- Regulation (EU) 2023/1113 (effective June 2023): Extends the Travel Rule to CASPs, aligning EU law with FATF standards 212.
- Directive (EU) 2015/849 (AMLD4): Subjects CASPs to the same AML/CFT requirements as banks 212.
- EBA Guidelines:
- Issued in July 2024, these clarify technical implementation steps for PSPs and CASPs 12.
- Repeal earlier 2017 guidelines, ensuring uniformity across the EU 212.
Impact on Stakeholders
- PSPs/CASPs: Must invest in systems to collect, verify, and share data. Non-compliance risks penalties or operational disruptions 212.
- Authorities: Enhanced ability to track illicit flows due to standardized reporting 12.
- Crypto Sector: Significant operational changes, as CASPs must integrate Travel Rule protocols into decentralized systems 612.
Hilarious Exceptions...
- Exemptions: Transfers under €1,000 (funds) or €1,000 (crypto) may have reduced requirements, though thresholds vary 2.
- Challenges:
- Balancing privacy with transparency (e.g., handling self-hosted crypto wallets).
- Technical hurdles in cross-border data sharing for crypto transactions 612.
Conclusion
The EU’s legal framework looks like a dictatorship with many restrictions. In my opinion, that's totally wrong. For millennia individual countries could tackle alone, now they can't because we have the autocracy of EU...?!
It looks like a globalised world and wrong ideology, not economy; the global economy it’s ok, but why globalised ideology...?!
I am passionate about individual freedom, but not only. Freedom and sovereignty are fundamental values, but it is not only my passion for personal freedom, it is what we have got from the Creator of men and women, the free will, the freedom of speech, the freedom to do the right things we learn about, and of doing what we want.
If one does wrong, he/she will be punished, but if he/she does well, why would a dictator take our given freedom away...?! That's the rhetorical question! Or, you may answer at comments section below.
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