- The FATF 24th Meeting will be to analyze the adoption of the Travel rule by member states in VASPs in their jurisdictions.
- Most of the member states are facing compliance crunches as industry expert estimates only 10% have rolled out effective steps.
The Financial Action Taskforce (FATF) members have an impending 24th June meeting. They will be scrutinizing how well the ‘travel rule’ has been discharged to the various Virtual Asset Service Providers (VASP).
In June 2019, the FATF updated guidelines that essentially covered the banking sector and other traditional financial systems. They extended the travel rule to now cover crypto exchanges and wallet providers amongst other VASPs. They would now be required to meet the same information exchange guidelines as other financial institutions when ownership of the virtual assets changed.
The travel rule was formulated to counter AML and CTF practices. It obligates financial institutions to improve their KYC protocols by ensuring collection and information sharing by requesting names, possible addresses, and account numbers to establish the parties involved in the respective transactions. This would create an audit trail, hence cracking down on criminal fronts leveraging the Virtual Assets infrastructure.
Shortly after presenting the new amendments to the travel rule, the FATF gave their member countries a year to enforce the VASPs in their jurisdictions. They would then hold a meeting to analyze steps and measures taken to align with the new standards. Although the guidelines might not be binding, the organization has warned that members not conforming with the standards might be kicked out of the body.
Countries Grappling With Compliance
CoolBitX CEO Michael Ou has offered insight into how various countries were fairing so far in the adoption of the new guidelines. Remarking that with close to two hundred member states, only 20 of them had tweaked their regulations to include the new travel rule amendments.
The remainder of the nations were on course with implementation but not fully there yet. His company is working with regulators to develop tech that will bolster compliance with the Travel Rule. They recently released their version of a solution dubbed Sygna Bridge to solve compliance woes.
He anticipates that the meeting will help the VASPs set actual deadlines for compliance with FATF standards. However, other analysts in the industry don’t share the same opinion. Siân Jones XReg Consulting expects that it would take considerably longer before all the member states achieve full compliance.