Sumsub, a global full-cycle verification platform, today launched a six-month free trial of its Travel Rule compliance solution. The product will be available to global cryptocurrency organizations in time for the enforcement of the landmark Crypto Travel Rule legislation expanding in the United Kingdom today to further combat money laundering and terrorism financing in the industry.
This extends the Financial Action Task Force’s (FATF) Recommendation 16 to virtual assets (VAs), including cryptocurrencies, and to virtual asset service providers (VASPs). The Travel Rule mandates both senders and recipients of all transfers involving VAs must exchange identifying information, ensure the accuracy of that data, and convey the data to government authorities if required.
Though the Travel Rule was introduced in the United States a decade ago, with increased regulation on all transfers in and out of the United Kingdom involving virtual assets, American organizations operating in the UK must be vigilant, Sumsub advised. All transactions must remain compliant under the expanded legislation, though there are certain requirements for transactions at or exceeding €1,000.
Sumsub’s Travel Rule solution facilitates secure information transfers between VASPs in accordance with compliance requirements. The free trial plan gives a single console access to create up to 10,000 outbound transactions and process unlimited inbound transactions, conduct free AML checks, and set up unlimited rules reflecting the regulatory and business requirements of each client. Sumsub will also offer additional premium and enterprise plan options with increased limits on outbound transactions and various other features.
The product trial will facilitate compliance with and ensure readiness as the U.S. sees additional legislation from the Securities and Exchange Commission, the Office of the Comptroller of the Currency, and more, especially as Bitcoin exchange-traded funds look to be approved in U.S. federal court. New customers will join Sumsub’s ecosystem of over 1,000 crypto businesses, including over 500 VASPs.
By the end of 2022, the cumulative sum of AML fines approached $5 billion. A significant portion of these stemmed from inadequate implementation of identity verification and KYC processes, Sumsub said.
In June 2023, the FATF deemed Travel Rule’s implementation to be “relatively poor,.” According to mutual evaluation and follow-up reports, three-quarters of jurisdictions were deemed only partially or not compliant with the requirements.
In the United States, the crypto Travel Rule is enforced for VA transactions that exceed $3,000. The United States is compliant on nine of the 40 recommendations and largely compliant on 22, partially compliant on five, and not compliant on four. Japan and Hong Kong enforced the Travel Rule for crypto transactions in June, with Portugal implementing it in July. Lithuania is set to enforce the Travel Rule in 2025.
“Addressing the compliance challenges posed by the Travel Rule requires a collective effort from everyone in the crypto industry – be it regulators, crypto businesses, users themselves and verification platforms such as Sumsub. Compliance with legislation like the Travel Rule will play a pivotal role in fostering trust and transparency for the crypto industry, and we are proud to be at the forefront by providing an effective solution catering to the demands of an increasingly complex regulatory landscape,” explained Jacob Sever, co-founder and CIO at Sumsub.
“Our free product trial reflects our ambitions to ensure a compliant VASP ecosystem. UK-based VASPs could potentially become compliant from day one of the new legislation. We remain committed to anticipating regulatory changes and introducing visionary solutions for markets ahead of implementation.”
