Travel Rule
Understanding and implementing Travel Rule compliance for cryptocurrency transactions.
Travel Rule
The Travel Rule requires Virtual Asset Service Providers (VASPs) to share originator and beneficiary information for cryptocurrency transfers above certain thresholds. PartnerAlly helps you manage Travel Rule compliance documentation and identify gaps.
What is the Travel Rule?
Origin and Purpose
The Travel Rule originated from:
- FATF Recommendation 16
- Extended to virtual assets in 2019
- Aims to prevent money laundering
- Enables transaction tracing
Basic Requirement
When sending crypto above threshold:
- Send originator information
- Receive beneficiary information
- Share with counterparty VASP
- Retain records
Threshold varies by jurisdiction. Common thresholds are $1,000 USD or $3,000 USD equivalents.
Information Requirements
Originator Information
Information about the sender:
| Field | Description |
|---|---|
| Name | Full legal name |
| Account number | Wallet address or account |
| Address | Physical address |
| National ID | For some jurisdictions |
| Date of birth | For some jurisdictions |
Beneficiary Information
Information about the receiver:
| Field | Description |
|---|---|
| Name | Full legal name |
| Account number | Wallet address or account |
Additional Data
May also be required:
- Transaction reference
- Amount and currency
- Date and time
- Purpose of transaction
Jurisdictional Variations
United States
US Travel Rule requirements:
- Threshold: $3,000 USD
- FinCEN regulations apply
- Required between VASPs
- Strict record keeping
European Union
EU Travel Rule (TFR):
- No threshold (all transactions)
- Applies to crypto transfers
- Self-hosted wallet rules
- Verification requirements
Other Jurisdictions
Requirements vary widely:
- Singapore: $1,500 SGD
- Japan: 100,000 JPY
- Switzerland: Variable
- Others: Check local regulations
Travel Rule requirements differ significantly by jurisdiction. Verify requirements for all jurisdictions where you operate.
Managing Travel Rule in PartnerAlly
Document Your Policies
Upload Travel Rule documentation:
- Travel Rule policy
- Threshold procedures
- Information collection processes
- Counterparty communication protocols
Identify Gaps
AI analyzes for Travel Rule gaps:
- Missing policy elements
- Incomplete procedures
- Documentation gaps
- Control weaknesses
Track Compliance
Use gaps and workflows to:
- Monitor implementation status
- Track remediation progress
- Document evidence
- Prepare for audits
Implementation Areas
Information Collection
Policies should cover:
- What information to collect
- When to collect it
- Verification procedures
- Customer communication
Counterparty Communication
Establish procedures for:
- Sending Travel Rule messages
- Receiving Travel Rule data
- Protocol selection
- Fallback procedures
Record Keeping
Document requirements for:
- Data retention period
- Storage security
- Access controls
- Audit trail
Threshold Monitoring
Address how you:
- Calculate transaction values
- Monitor for threshold crossings
- Handle multi-transaction patterns
- Currency conversion
Common Travel Rule Gaps
Policy Gaps
Frequently missing elements:
- Clear threshold definitions
- Jurisdictional applicability
- Self-hosted wallet procedures
- Incomplete sender information
Process Gaps
Common process issues:
- No verification procedure
- Missing counterparty protocol
- Inadequate record keeping
- Poor audit trail
Technology Gaps
Technical considerations:
- Protocol implementation
- Message standardization
- Data validation
- System integration
Travel Rule Solutions
Protocol Options
Common Travel Rule protocols:
- TRISA
- OpenVASP
- Sygna Bridge
- TRP (Travel Rule Protocol)
- Direct VASP connections
Selecting a Solution
Consider:
- Counterparty coverage
- Jurisdiction requirements
- Integration complexity
- Ongoing costs
- Data privacy
Creating Remediation Workflows
From Travel Rule Gaps
When PartnerAlly identifies Travel Rule gaps:
Review the Gap
Understand what's missing.
Generate Workflow
Create remediation plan.
Customize Tasks
Adjust for your implementation.
Assign and Execute
Work through the tasks.
Document Completion
Upload evidence of remediation.
Typical Workflow Tasks
Travel Rule implementation often includes:
- Policy drafting/update
- Procedure development
- Technology selection
- Integration implementation
- Testing
- Training
- Go-live
- Documentation
Evidence Collection
What to Document
For Travel Rule compliance:
- Policies and procedures
- Technology implementation records
- Training completion
- Transaction logs (samples)
- Counterparty communications
Organizing Evidence
Structure evidence by:
- Requirement area
- Time period
- Control type
- Audit needs
Audit Preparation
Common Audit Questions
Expect auditors to ask:
- How do you identify threshold transactions?
- What information do you collect?
- How do you verify beneficiary data?
- What happens when counterparty can't comply?
- How long do you retain records?
Demonstrating Compliance
Prepare to show:
- Written policies
- Implemented procedures
- System documentation
- Sample transactions
- Training records
Best Practices
Policy Development
- Be comprehensive but clear
- Cover all jurisdictions you operate in
- Define responsibilities explicitly
- Plan for protocol failures
Implementation
- Test thoroughly before go-live
- Document all decisions
- Train staff completely
- Monitor continuously
Ongoing Management
- Review policies regularly
- Monitor regulatory changes
- Update for new jurisdictions
- Maintain audit readiness
Challenges and Solutions
Counterparty Challenges
| Challenge | Solution |
|---|---|
| VASP won't share data | Document rejection, assess risk |
| Unknown counterparty | Verification procedures |
| Different protocols | Multiple protocol support |
| Self-hosted wallets | Risk-based approach |
Technical Challenges
| Challenge | Solution |
|---|---|
| Protocol integration | Use established solutions |
| Data standardization | Follow industry standards |
| Volume handling | Scalable architecture |
| Privacy concerns | Data minimization |
Common Questions
Does Travel Rule apply to all crypto?
Most jurisdictions apply it to VASPs conducting transfers above threshold. P2P and below-threshold may be exempt but check local rules.
What if the counterparty VASP won't comply?
Document the situation, assess the risk, and determine whether to proceed, reject, or file suspicious activity reports as appropriate.
How do self-hosted wallets work?
Requirements vary. Some jurisdictions require additional verification for self-hosted wallet transfers. Document your approach.
How often should we review Travel Rule compliance?
At minimum annually, or when regulations change, you expand to new jurisdictions, or internal processes change.
Next Steps
- Wallet Screening - Address screening requirements
- Crypto Compliance - Overview of crypto compliance
- Compliance Intelligence - Track regulatory changes