Travel Rule: Explained

August 25, 2021 by
Etana Team

Etana Custody Maintains Regulatory Standards

Last month, two regulatory agencies, The Financial Crimes Enforcement Network (FinCEN) and the Federal Reserve System proposed to modify a longstanding rule requiring financial institutions to release client information for international transactions worth at least $3,000; known as the Travel Rule since 1995.

The agencies have proposed to lower that threshold to $250. FinCEN published the following statement explaining the reason for the proposal:

"FinCEN's analysis of 2,000 suspicious transactions reports (SARS) filed between 2016 and 2019, the mean and medium dollar value was $509 and $255, respectively. Almost all the transactions began or ended outside the US."
(U.S.: FinCEN)

In traditional markets, banks, broker-dealers, and other financial institutions are required to track the names, addresses, and account numbers of the originator (sender of funds) and the beneficiary (receiver of funds). Financial regulations like the Travel Rule maintain security and safeguard clients' and investors' digital assets. Reducing the Travel Rule's threshold to $250, would provide greater information to run analytics, find the risks associated with suspicious transactions, and help prevent cybercriminal activities. The current conversation in the marketplace is focused on the security of private information held by financial institutions as well as the idea that crypto should remain decentralized and unregulated. Companies doing business in the crypto markets will have to invest time and money into developing technical solutions and processes that are scalable in order to comply with the Travel Rule proposal. Certain companies looking to comply with the FinCEN rule may find working with a custodian of benefit in meeting the Travel Rule requirements. When digital and fiat assets are solely held in custody, partnered exchanges and corporations will have the peace of mind that they are in compliance with existing regulations.

Etana's top priorities are the security of our client's digital and fiat assets, as well as the protection of personal information. In the rapidly evolving crypto industry, regulators are guiding participants to comply with new rules for safety and stability. Etana is prepared for this increase in regulatory standards and we strive to stay ahead of regulatory compliance before it is a requisite. Etana has a history of strict conformance to best AML/KYC practice and has been compliant with the Travel Rule since going operational in 2016. As a qualified custodian, the onboarding process for a prospective Etana client is thorough and compliant with Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. Among other reasons, our detailed screening process is conducted to verify that a client's transaction aligns with the Travel Rule's requirements. For the world of crypto to mature, industry players need to set the standard for taming the Wild West of the digital trading market.

Reputation is built on the trust and security of Etana, and our standards of a regulatory environment stand on the stature of other financial institutions.