FATF Calls for Improvement on Crypto Travel Rule Worldwide

The Finance Action Task Force (FATF) is calling on all member states of the United Nations body to implement the Travel Rule. This is an effort to regulate cryptocurrencies in an effort to combat terrorism financing and money laundering using virtual assets. However, more than half of the member states fail to implement it in a way that is up to standards of the FATF.

The proposal of the Travel Rule for crypto was introduced in 2019 as FATF Recommendation #16. Its latest revision was in 2022 and their latest survey revealed that it hasn’t been followed as of 2023. Bitcoin trading continues and it’s rapidly expanding in adoption worldwide.

What is the Travel Rule in the context of cryptocurrencies?

The Travel Rule is a special protocol setting limits to crypto transactions. If a transaction reaches $1,000, then the platform overseeing this trade should provide information on who are all parties involved, namely recipient and the sender. It’s similar to the know-your-customer (KYC) practised by any crypto casino online.

Anonymity is one of the key elements that made cryptocurrency so popular and the Travel Rule is removing it for the sake of regulations. If implemented, then the FATF could cover many loopholes in a blockchain-based ecosystem exploited for criminal activities. The Travel Rule is expected to be implemented on major crypto businesses like exchanges, wallets, and casinos.

Who are the FATF?

The Finance Action Task Force is an international body dedicated to stopping major crimes. Among their focuses that the Travel Rule aims to crack down on are financing of terrorist activities and money laundering.

They are the global standard for financial crime, giving their voice weight in matters that involve all state members of the United Nations body. FATF’s overall goal is to limit if not limit all kinds of loopholes that can fund operations that pose international security.

What does the FATF want regarding the Travel Rule?

The value and trade volume of cryptocurrencies are increasing rapidly in favour of its investors. However, the FATF still sees loopholes that are not protected by regulation. Thus, they want members of the United Nations to implement the Travel Rule without delay. Closing these loopholes is at topmost priority in 2023.

Why is the Travel Rule important?

The Travel Rule is only one of FATF’s recent recommendations. Following its guidelines can secure the crypto market as a profitable industry. It can gain the trust of investors who have doubts about the legitimacy of cryptocurrencies as a whole. Those people are confident in Bitcoin’s profitability but share the same concerns FATF does when it comes to loopholes.

As of 2023, there are many tools in blockchains that can be used for money laundering. If the Travel Rule is implemented, then authorities can track theft and terrorism funding using virtual assets. Thus, protecting users who fall victim to scams and regulation bodies can help identify legitimate businesses for exchanges and crypto casino online.