It comes from FATF Recommendation 16 and was extended to virtual asset service providers in 2019. In the EU it applies to crypto transfers through the Transfer of Funds Regulation, in force since December 2024. Unhosted wallets and differences between countries make implementation hard.
Example
An exchange sending 5,000 euros in crypto to another exchange sends the sender's name and account details along with the transfer.
Where it appears in the exams
This topic is relevant for CCAS, CAMS.
Read more
The FATF Travel Rule explained: wires and virtual assets
Related terms
- Sanctions screening: Sanctions screening is checking customers, owners, counterparties and payments against sanctions lists to make sure the firm does not deal with listed persons or prohibited activity.
- Customer due diligence (CDD): Customer due diligence is the set of checks a firm does on a customer: identify and verify them, identify the beneficial owner, understand the purpose of the relationship, and monitor it over time.
Source: FATF Recommendation 16; EU Regulation 2023/1113. Independent explanation for study purposes, not legal advice.