Global tech company Sumsub, which provides customizable KYC, KYB, AML and transaction monitoring solutions, has launched a Travel Rule solution for the crypto industry, offering a full compliance toolkit across the whole customer lifecycle.

This includes secure Travel Rule information transfers between virtual asset service providers (VASPs), all the necessary KYC checks, AML screening and verification orchestration according to regulatory specifics and business needs.

Designed to combat money laundering and terrorism financing, the Travel Rule extends FATF Recommendation 16 on wire transfers to virtual assets like cryptocurrencies and to VASPs, so that the senders and recipients of all transfers must exchange identifying information, guarantee its accuracy and convey the data to government if required. In the wake of FTX’s demise and general turbulence across crypto exchanges, governments are moving to tighten regulations.

According to FATF, 29 of 98 countries have already passed Travel Rule legislation. In Hong Kong, the Travel Rule will impact business in June. In the UK’s money laundering law, Regulation 5 on crypto asset transfers comes into force this September. The EU is rolling out its comprehensive Markets in Crypto Assets (MiCA) regulation, slated for enforcement in 2024.

In the Middle East, Dubai has already set forth new crypto regulations. And recently, Japan announced that crypto transactions would be subject to the Travel Rule by May 2023.

Preparing for compliance is crucial. Consequences of violating regulations include fines, reputational damage and license revocation. For instance, in August, New York’s financial regulator fined Robinhood Crypto $30 million for significant failings in AML compliance, transaction monitoring and cybersecurity.

Working with over 500 crypto clients since 2015, Sumsub has the expertise and experience to support compliance infrastructure for the crypto community. Sumsub’s Travel Rule solution detects VASP-to-VASP payments, defines the receiving VASP, identifies account type, and checks for sanction violations, PEPs and adverse media. As a result, Sumsub enables crypto platforms to securely exchange and store customer information (including names, wallet addresses, etc.), making sure such data is not shared with third parties.

The Travel Rule solution can be easily combined with Sumsub’s advanced transaction monitoring (KYT) solution. KYT, or know-your-transaction, is a flexible set of procedures that usually includes analyzing sender/receiver profiles, calculating risk scores and cross-checking KYC and transaction data. Sumsub’s crypto customers can control the risk management process by setting rules to automate transactions with counterparties based on internal risk criteria. As a result, they can perform risk analysis based on up-to-date information and easily generate reports, if needed.

“With the Travel Rule solution Sumsub offers, crypto companies can enjoy high pass rates, stay ahead of regulatory changes, and be fully prepared for new compliance standards. The crypto compliance toolkit from Sumsub allows industry players to safely develop and expand globally. Our primary focus is to create a reliable ecosystem for the crypto community that ensures compliance with legal requirements and protects both businesses and individuals from fraud and money laundering along the way. Introducing the Travel Rule solution is an important step toward this ambitious goal,” explains Vyacheslav Zholudev, co-founder and CTO at Sumsub.