Travel Rule
FATF Travel Rule
Travel Rule is a FATF requirement under which crypto providers (VASPs) pass sender and recipient data along with the transaction for transfers above a threshold.
What is Travel Rule (FATF Travel Rule)?
The Travel Rule is the FATF standard that extended the requirements of Recommendation 16 on wire transfers to crypto assets. Originally it applied to banks, which must pass information about the payer and the payee with a transfer. The FATF recommendations of 2019 obliged virtual asset service providers (VASPs) to do the same for crypto asset transfers.
## How it works
The sending VASP collects the sender's data (name, account number or wallet address, and in some scenarios address or date of birth) and the recipient's data, then passes them to the receiving VASP before or at the same time as the transaction is executed. The receiving side checks the data received and decides whether to credit the funds, request additional information, or block the transfer.
The base threshold in the FATF recommendations is 1,000 USD/EUR. Some jurisdictions have no threshold at all, and in the EU the funds transfer regulation applies the requirement to crypto transfers without a threshold. Specific conditions depend on the country, so they must be verified under local legislation.
## Where it applies
The rule affects crypto exchanges, custodial wallets, OTC desks, payment services that convert into crypto assets, and providers operating at the intersection of fiat and crypto. For self-hosted (non-custodial) wallets the obligations differ: some jurisdictions require verifying the owner of the address, but there is usually no direct data exchange as between VASPs.
## What it affects
For regular traffic and payment flows, the Travel Rule means more checks on deposits and withdrawals. Transfers without complete counterparty data may be delayed, and a higher rate of withdrawal refusals increases the load on support and reduces deposit conversion. Providers that do not transmit data correctly risk being blocked by their partners.
## Common mistakes
Typical mistakes include: assuming the rule does not cover transfers between a client's own wallets; not checking whether the counterparty is a VASP; storing data without complying with personal data protection requirements (for example, GDPR in the EU); relying on a single threshold without accounting for local rules and requirements for the content of the data message itself.
FAQ
What is the Travel Rule in simple terms?
It is the obligation of crypto companies to pass on data about the people involved in a transfer together with the transaction itself. The rule exists to combat money laundering and terrorist financing.
What is the Travel Rule threshold?
The base threshold in the FATF recommendations is 1,000 USD/EUR. However, rules differ between countries: in some the threshold is lower, while in the EU the requirement also applies to crypto transfers without a threshold. Check the legislation of the specific jurisdiction.
Does the Travel Rule apply to transfers to a personal wallet?
Direct data exchange is usually not required when the transfer goes to a self-hosted wallet. However, some countries require confirming the owner of the address, so the risk remains and must be taken into account.