The EBA Issues New ‘Travel Rule Guidelines’

Introduction

The Financial Intelligence Analysis Unit (the “FIAU“) has announced that the European Banking Authority (the “EBA“) has issued new Guidelines on the ‘travel rule’ under the revised Transfer of Funds Regulation (Regulation (EU) 2023/1113). These Guidelines provide detailed instructions on how to comply with the requirement for information to accompany transfers of funds and certain crypto-assets.

Key Provisions of the Travel Rule Guidelines

The new Guidelines are designed to ensure that payment service providers (“PSPs”), intermediary PSPs (“IPSPs”), crypto-asset service providers (“CASPs“), and intermediary CASPs (“ICASPs“) have robust processes in place to handle the information required for transfers. They cover the identification, transmission, and handling of data to ensure compliance with anti-money laundering (“AML“) and counter-terrorist financing (“CTF“) regulations.

The Guidelines specify the types of information that must accompany transfers of funds and crypto-assets. PSPs and CASPs must ensure that this information is accurate and complete. They also outline the steps that service providers should take if information is missing or incomplete. This includes verifying the identity of the payer and the payee and ensuring that all necessary data is included in the transfer.

Uniform Application Across the EU

One of the primary goals of these Guidelines is to create a uniform and effective application of the travel rule across the European Union. This uniformity is crucial for enabling authorities to trace transfers effectively when needed for preventing, detecting, or investigating money laundering and terrorist financing activities.

These new Guidelines will replace the current Joint Guidelines under Article 25 of Regulation (EU) 2015/847, effective from December 30, 2024. The previous guidelines outlined measures for PSPs to detect missing or incomplete information and manage transfers lacking required information.

Adoption by the FIAU

The FIAU plans to adopt these new Guidelines through revisions of existing documents, including the Implementing Procedures – Part II for the VFA Sector. Until these revisions are complete, interested parties can consult the Guidelines on the FIAU’s or EBA’s website.

PSPs, CASPs, IPSPs, and ICASPs must update their systems and procedures to comply with the new Guidelines. This includes ensuring that their information transmission systems are capable of handling the required data without errors and are secure. There is also a transitional period until July 31, 2025, for CASPs and ICASPs to make necessary adjustments.

The Guidelines emphasize the need for transparency and security in the transfer of funds and crypto-assets. This includes ensuring that all parties involved in the transfer chain have access to the required information and that this information is transmitted securely and accurately.

Conclusion

The EBA’s new ‘Travel Rule Guidelines’ represent a significant step forward in ensuring the security and transparency of financial transactions involving funds and crypto-assets across the EU. Service providers must take immediate steps to comply with these Guidelines to enhance their AML and CTF measures, thereby contributing to a safer and more secure financial environment.

For further information, you can consult the full Guidelines on the FIAU’s website here or the EBA’s website here.