Sumsub is launching a six-month free trial of its Travel Rule compliance solution, starting September 1st. The product will support its cryptocurrency clients as the United Kingdom begins its enforcement of the landmark Crypto Travel Rule legislation on 1 September, aimed at combating money laundering and terrorism financing in the industry. 

This extends the Financial Action Task Force’s (FATF) Recommendation 16 to virtual assets (VAs), including cryptocurrencies, and to Virtual Asset Service Providers (VASPs). The Travel Rule mandates that both senders and recipients of all transfers involving VAs must exchange identifying information, ensure its accuracy, and convey the data to government authorities when required. 

Travel Rule Compliance Solution

Sumsub unveiled its initial Travel Rule solution in March. The product facilitates secure information transfers between VASPs in accordance with compliance requirements, enabling crypto firms to both send and receive Travel Rule messages for corresponding transactions. The free trial plan gives access to a single console with the ability to create up to 10,000 outbound transactions and process an unlimited number of inbound transactions, free AML checks over the whole trial period and setup of unlimited numbers of rules reflecting the regulatory and business requirements of each client. Sumsub will also offer additional premium and enterprise plan options with increased limits on the number of outbound transactions, among access to various other features. 

Sumsub’s trial of the Travel Rule solution will be accessible to more firms and facilitate compliance with new UK laws to ensure readiness for the EU’s Transfer of Funds Regulation (TFR) and Markets in Crypto-Asset (MiCA) regulations, coming into effect in 2024. New clients will join Sumsub’s ecosystem of over 1,000 crypto businesses which includes over 500 VASPs. 

Rise in Anti-Money Laundering Fines

By the end of 2022, the cumulative sum of Anti-Money Laundering (AML) fines reached nearly a staggering $5bn dollars. A significant portion of these stemmed from the inadequate implementation of identity verification and KYC processes. 

Travel Rule is set to enhance transparency and accountability in crypto transactions, further aligning the regulatory framework with the traditional financial sector. Against the backdrop of recent market upheaval, with the challenges faced by major crypto exchanges, global governments are taking decisive actions to bolster regulations and provide clarity to the evolving industry.

Global Travel Rule Implementation

In June 2023, the FATF deemed Travel Rule’s implementation to be “relatively poor,” with three-quarters of jurisdictions only being partially compliant or not compliant with the requirements according to mutual evaluation and follow-up reports.

Japan and Hong Kong have enforced the Travel Rule for crypto transactions in June this year, with Portugal implementing Crypto Travel Rule in July. Lithuania is set to enforce Travel Rule in 2025. In the United States, the crypto Travel Rule is enforced for VA transactions that exceed $3,000.

"Addressing the compliance challenges posed by the Travel Rule requires a collective effort from everyone in the crypto industry – be it regulators, crypto businesses, users themselves and verification platforms such as Sumsub. Compliance with legislation like the Travel Rule will play a pivotal role in fostering trust and transparency for the crypto industry, and we are proud to be at the forefront by providing an effective solution that caters to the demands of an increasingly complex regulatory landscape. Our free compliance product trial reflects our ambitions to ensure a compliant VASP ecosystem. UK-based VASPs could potentially become compliant from day one of the new legislation. We remain committed to anticipating regulatory changes and introducing visionary solutions for markets ahead of implementation, as we have done with our Travel Rule solution,” explained Jacob Sever, Co-Founder & Chief Innovation Officer at Sumsub.