To the left, you can see the different parties involved in such a transaction. The core transfer is between the Originating Customer and the Beneficiary Customer, who could be the same person.
Before the underlying settlement transaction is performed on the blockchain, the Originating VASP (for example, a fiat on-ramp) is required to implement the Travel Rule by identifying the Beneficiary VASP and sending details about the transaction to the counterparty. The Beneficiary VASP has to make the decision if they want to accept the transaction before the transaction is sent.
The global AML watchdog, the Financial Action Task Force (FATF), has recommended that financial regulators worldwide require this of crypto businesses (or, as they call them, VASPs). Many prominent financial hubs such as the United States, Singapore, and Switzerland are already enforcing the Travel Rule, and most other countries are in the process of passing these requirements.
If your VASP is registered in jurisdictions like Singapore, which makes implementing the Travel Rule in your business a requirement for receiving a license, this should be at the top of your mind.
Conversely, even if your home jurisdiction has not yet implemented the Travel Rule, you still need to evaluate which of your counterparties require it and comply accordingly, or they will no longer be allowed to transact with you.
For example, suppose you are a crypto-to-crypto exchange registered in a jurisdiction that does not yet require the Travel Rule, but you rely on fiat-onramps in other countries where the requirement exists; noncompliance could lead to substantial revenue losses.
The asset to be transferred (eg. BTC)
Amount of asset to be transferred
Information about the Originating Customer:
-Account number or blockchain address;
-Identity number eg. National ID number or Passport number.
Information about the Beneficiary Customer:
-Account number or blockchain address.
The industry has convened on the IVMS101 standard data model for defining this, which is supported in its entirety by Notabene.
Regardless of your jurisdiction, you should have some level of record-keeping to at least prove that the Travel Rule was not required for a particular transaction.
Notabene’s solution is built to greatly minimize the time and effort needed of engineering teams to make these changes, compared with building an in-house solution or implementing a less holistic travel rule solution.
After the technical team implements the API, the Notabene platform allows the compliance team to manage these decision points without having to further involve the technical team.
The Notabene platform will help compliance officers with these decisions. The Notabene API provides the information you will need to reconcile the incoming travel rule transactions with the underlying transaction layer.
Custodial vs. non-custodial wallets
Classify transaction type by seamless on-chain checks or by asking your customer when they initiate a transaction
Automatically trigger Travel Rule compliance above a defined transaction value threshold
The first part of implementing the Travel Rule is Wallet Identification. To help you identify wallet type (hosted, unhosted), Notabene performs multiple checks: a combination of your own data, that of blockchain analytics companies and ultimately asking your customer about the counterparty.
Pre-built UI components
Don’t waste time building new flows. Integrate a fully customizable I-frame widget to ensure a seamless withdrawal experience
Instant regulatory updates
Avoid the need to constantly update when new regulations or updates occur
Use our validation API instead of the pre-built UI to identify and collect information in a way that's built to your specifications.
... and more to come!
Access Notabene’s VASP directory to get counterparty information that is up-to-date and third-party verified
Automated rules engine
Set compliance rules to approve transfers from counterparties you trust automatically
Automated data validation
Make sure generated transfers include all of the data required by jurisdictions of both transaction counterparties.
Approve, reject, & cancel transfers
Allow for auto-approval or cancelation of a transfer based on its content
Integrate once and exchange data over the most commonly adopted Travel Rule protocols in the industry
The FATF Travel Rule is a new requirement for cryptocurrency exchanges, digital wallet providers, and financial institutions that exchange, hold, safe keep, convert and sell virtual assets. This rule requires virtual asset service providers (VASPs) to disclose specific customer data when transacting crypto assets over a particular threshold.
Since the Travel Rule extended to crypto companies in 2019, regulators worldwide have interpreted and applied the recommendation differently. Many jurisdictions have different enforcement dates, varying thresholds that trigger the Travel Rule, contrasting approaches to the required Originator and Beneficiary information, and have varying methods of dealing with transactions to unhosted/non-custodial wallets.
These gaps in implementation and thresholds are essential to note as companies ramp up their Travel Rule compliance plans and test cross-jurisdictional Travel Rule transactions.
If you wish to read more about the travel rule, you can get our State of Crypto Travel Rule Compliance Report 2022.
Notabene was founded in 2020 to solve FATF’s Crypto Travel Rule. As crypto-native entrepreneurs, we realised how daunting–yet vital–regulatory compliance would be in this space.
To solve Travel Rule compliance for the entire financial services industry, we began building a trusted data layer to blockchain transactions for protocol-agnostic communication.
Now, almost 50 businesses use our holistic software to manage counterparty risk with >150 counterparties without impeding their customer’s transaction flow.
But that’s just the beginning.
Notabene is on a path to remove global regulatory compliance complexity to cement crypto’s role in mainstream transactions.
We’re on a mission to make crypto transactions a part of the everyday economy.
Notabene offers the industry’s only comprehensive travel rule compliance solution, allowing you to connect with the widest amount of VASPs around the world. Our hosted service is focused on making it easy to integrate for technical teams, as well as helping compliance officers manage both incoming and outgoing transactions.
Crypto Wallet Identification
Identify blockchain address type (custodial, non-custodial) to apply necessary regulatory requirements.
Data Identification & Collection
Based on yours and the counterparty VASP's jurisdictional requirements, identify and request from your customer the required information needed for Travel Rule compliance.
Full UI Customisation
Integrate our crypto wallet identification plugin with prebuilt dynamic UI components into your product or build your own using our APIs.
Automatically pull the available data from our integration partners: Chainalysis, Elliptic, Refinitiv, Bitgo, TRM Labs and more.
Perform counterparty due diligence and
access comprehensive VASP data like incorporation and regulatory information.
See which of your counterparties comply with the Travel Rule.
Work with any VASP, regardless of the Travel Rule protocol they use.