Crypto Travel Rule: FATF's New Standard for Virtual Asset Service Providers
The Financial Action Task Force (FATF) introduced the Crypto Travel Rule in 2019 as an extension of its wire-transfer standard, Recommendation 16. This rule requires virtual asset service providers to attach sender and recipient details to qualifying transfers.
In practice, when a transfer happens between two providers, the sending platform collects and transmits originator and beneficiary information before or alongside the transaction itself. The receiving platform then checks this information against its own customer data, which must be done immediately and securely.
The core obligation of the Crypto Travel Rule is to close an identity gap in blockchain transactions. Regulators found that the speed of these transactions outpaced the ability of individual platforms to verify identities.