On May 24, 2022, nine Canadian cryptocurrency companies—Wealthsimple, CoinSmart, Netcoins, Shakepay, VirgoCX, Tetra Trust, BlocPal, Balance and Coinsquare—announced their membership in the Travel Rule Universal Solution Technology (TRUST), an industry group formed to advance compliance with the Financial Action Task Force (FATF) anti-money laundering guidelines for virtual asset service providers (VASP). TRUST, and its expanded Canadian membership, is a positive development for those seeking to prevent illicit cryptocurrency transactions, or aiming to trace funds into the hands of wrongdoers when such transactions occur.
FATF Guidelines and TRUST
As we discussed in our previous insight, FATF’s Take on Digital Assets: Updated Guidance and Recommendations, in October 2021, FATF updated its Guidance for a Risk Based Approach to Virtual Assets and Virtual Asset Service Providers (FATF Guidance). We noted that “persons in the virtual asset space should be aware of the FATF Guidance, assess its potential implications for their business and consider what measures ought to be taken to ensure compliance.”
Following the updated FATF Guidance, TRUST was launched in February 2022 as a coalition of 18 U.S. cryptocurrency companies. TRUST is “a platform that allows cryptocurrency exchanges to securely send information legally required by the “Travel Rule.” As described by the FATF Guidance, the Travel Rule “includes the obligation to obtain, hold, and submit required originator and beneficiary information associated with [virtual asset] transfers in order to identify and report suspicious transactions, take freezing actions, and prohibit transactions with designated persons and entities.”
While the standards and measures identified in the Travel Rule have long applied to traditional financial institutions, the goal of TRUST is for cryptocurrency companies “to achieve top-tier compliance with the Travel Rule, while fully honoring customers’…
