Beneficiary Customer

A beneficiary customer is an individual or entity that receives the funds or benefits during a digital asset transfer. The term is often used concerning anti-money laundering and counter-terrorist financing (AML/CTF) regulations.

When VASPs process transactions, they must conduct due diligence to identify and verify the parties involved. The customer initiating the transaction is known as the originator, and the party receiving the funds or benefits is the beneficiary customer. In some cases, the beneficiary customer may be an account holder with a VASP; in other instances, it could be a third party.

Understanding the identity and purpose of the beneficiary customer is crucial for VASPs to ensure compliance with regulatory requirements, prevent financial crimes, and enhance transparency in financial transactions. This process helps mitigate the risk of money laundering, terrorist financing, and other illicit activities.

The Financial Action Task Force's (FATF) Travel Rule mandates transmitting certain information, including the identity of the originator and beneficiary customer, between VASPs, or VASPs and self-hosted wallets involved in virtual asset transfers.