What Is Known about Germany's Upcoming Implementation of the FATF Travel Rule

Germany's Federal Ministry of Finance (BMF) published a draft of rules indicating its plans to implement the FATF Travel Rule for crypto transactions. With this, the country will increase its compliance requirements for virtual asset service providers (VASPs). These changes in Germany's regulations are open for comments until June 14th 2021.

What does BMF's draft say about the FATF Travel Rule?

The Federal Ministry of Finance plans to enforce that the parties involved in crypto asset transactions exchange information about the originator and the beneficiary. The goal is to track these transactions regarding the authorised persons to prevent money laundering or terrorist financing, as it is possible with bank transfers. In addition, this data transfer is meant to enable a check for persons affected by sanctions and a more risk-oriented approach by the VASPs.

Fun Fact:

With German precision, the BMF estimated the annual recurring costs for VASPs to be compliant as 420.813 Euros and 83 cents.

What does the BMF’s draft say about transactions involving non-custodial wallets?

BMF mentions that the personal information of the ones involved in the transaction must also be collected and stored if the transfer is from or to a wallet that is not managed by a crypto custodian (known as non-custodial, unhosted or private wallets). The VASP has to ensure that the collected information is accurate.

The requirement for collecting information from non-custodial wallets is a growing concern seen in the already implemented regulations in Switzerland, the Netherlands, and Singapore. In these countries, it resulted in increased manual labour for VASP compliance teams, as users are required to prove ownership of their non-custodial wallets using screenshots or Satoshi tests.

21 Analytics is the only compliance provider that offers a 100% accurate solution for collecting, validating, and storing personal information from the non-custodial wallet owner, based on AOPP, an open protocol initiated by us.

You can learn more here or book a demo call with us today! Als Schweizer Firma sprechen wir auch Deutsch.

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