In 2019, the Financial Action Task Force (FATF) expanded its anti-money laundering and counter-terrorist financing (AML/CFT) measures to encompass virtual assets and virtual asset service providers (VASPs), this measure is known as Recommendation 16 (the Travel Rule).
This extension aimed to prevent criminal and terrorist exploitation of the virtual asset sector. Subsequently, FATF conducted three reviews assessing the implementation of its standards on virtual assets and VASPs.
When implemented, Recommendation 16 serves as a set of rules VASPs must follow when conducting virtual asset transfers. According to Recommendation 16, VASPs must collect, verify and exchange specific customer information before a virtual asset transfer can occur. Moreover, it guides how VASPs are to transact with self-hosted wallets.
The Transfer of Funds Regulation (TFR) is the European Union’s implementation of the Travel Rule.
Read more about Recommendation 16: