U.S. crypto-industry players unveil plan to implement FATF requirements

A consortium of leading U.S. cryptocurrency companies, including Coinbase and Gemini, has unveiled an official plan for its members to comply with the [simple_tooltip content=’Group for the development of financial measures to combat money laundering’]FATF[/simple_tooltip] requirements for anti-money laundering and countering the financing of terrorism (AML/CFT).

The U.S. Travel Rule Working Group (USTRWG), a coalition of 25+ U.S. VASPs, is collaborating to design and build an industry-led Travel Rule solution that meets requirements for U.S. VASPs.
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— Global Digital Finance (@GlobalDigitalFi) October 20, 2020

In June of last year, the FATF tightened regulation of the cryptocurrency industry, obliging its participants to comply with AML/CFT procedures similar to those of traditional financial firms.

Under the organization’s requirements, bitcoin exchanges and other cryptocurrency service providers (VASPs) must exchange user data when users move funds between platforms.

In the 25-member U.S. Travel Rule Working Group (USTRWG), a phased approach to implementing the VASP requirements was proposed.

The first phase will see USTRWG members sign formal agreements to create a reliable data-sharing network. A centralized bulletin board will also be established to locate other VASPs when conducting transactions.

This phase will be a pilot for consortium participants and will serve as a proof of concept.

In Phase 1.5, VASPs outside the USTRWG will be able to connect to the network.

In later stages, the project will continue to expand to cover additional assets and use cases for its mechanisms.

The USTRWG will remain a “closed network,” and access will be granted only to those VASPs that have completed the adaptation process and meet the established criteria.

The consortium’s proposed solution is based on the industry standard IVMS101 for meeting FATF requirements, previously presented by the Chamber of Digital Commerce, the World Digital Finance Organization, and the International Association of Digital Asset Exchanges.

As a reminder, the FATF has found that its standards for regulating the cryptocurrency industry in the United States are being implemented with shortcomings.

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