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• The FATF Travel Rule in Gibraltar applies to all cryptocurrency transactions above EUR 1,000.
• VASPs must register with the GFSC, verify identities, and perform enhanced due diligence for high-risk transactions.
• VASPs must collect additional information for transactions involving unhosted wallets to ensure thorough verification and monitoring.

In Gibraltar, the FATF Travel Rule, came into effect with the implementation of the Proceeds of Crime Act 2015 (Transfer of Virtual Assets) Regulations 2021 (POCA) on March 22, 2021. However, virtual asset service providers (VASPs) were given an 18-month grace period, making full compliance mandatory only by September 22, 2022.

‍Key Features of the FATF Travel Rule in Gibraltar

‍The FATF Travel Rule in Gibraltar requires VASPs to share detailed transaction-related personal information for all virtual asset transfers above EUR 1,000. This information includes the full names, wallet addresses, and other identifying information of both the originator and the beneficiary.Compliance RequirementsVASPs in Gibraltar must comply with several key requirements. 

• Registration and Licensing: VASPs must obtain a DLT Provider License from the Gibraltar Financial Services Commission (GFSC). The GFSC provides a structured process for applying for authorization, which includes pre-application engagement and an initial application assessment.

• Verification of Identities: VASPs must verify the identities of their counterparties, especially when dealing with high-risk jurisdictions. The aim behind this measure is to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

• Enhanced Due Diligence: For transactions involving unhosted wallets, VASPs are required to collect additional information such as the originator's name, physical address, national identity number, customer identification number, or date and place of birth. Through enhanced due diligence, GFSC seeks to mitigate the risks associated with unhosted wallets and ensure thorough verification and monitoring.

For Originators, it includes:

• Full name
• Wallet address
• One of the following: physical address, national identity number, customer identification number, or date and place of birth

For Beneficiaries:

• Name
• Wallet address

If the required Travel Rule data is missing, incomplete, or delayed, the beneficiary VASP must implement risk-based procedures to address these gaps, potentially suspending or rejecting the transfer until compliance is achieved.

‍Impact on Cryptocurrency Exchanges and Wallets

‍VASPs in Gibraltar, including cryptocurrency exchanges and wallet providers, must adhere to the FATF Travel Rule under the supervision of the GFSC. This regulation is crucial for preventing money laundering and terrorism financing. VASPs must monitor crypto transfers. All transactions, especially those involving unhosted wallets, require monitoring and additional information gathering during high-risk transactions. They must also develop risk-based policies for managing transfers involving unhosted wallets and ensure thorough verification and monitoring.

Failure to adhere to the FATF Travel Rule requirements in Gibraltar can lead to significant penalties. For a summary conviction, the penalties may include imprisonment for up to one year, a fine up to level 5 on the standard scale, or both. In the case of conviction on indictment, the penalties can be more severe, with imprisonment for up to two years, a fine, or both. 

‍Global Context and Comparisons

‍Gibraltar enforces a EUR 1,000 threshold for the Travel Rule, aligning with FATF recommendations. Comparatively, Switzerland's Crypto Travel Rule threshold is 1,000 CHF, whereas in the United Kingdom, it is 1,000 GBP, and in Japan, the threshold is $3,000.

‍Concluding Thoughts

‍Since implementing the FATF Travel Rule in March 2021, Gibraltar requires detailed verification for cryptocurrency transactions over EUR 1,000. This regulation aims to safeguard financial transactions and prevent illegal activities such as money laundering and terrorism financing.

‍FAQs

1. What is the minimum threshold for the Travel Rule in Gibraltar?

‍The Travel Rule applies to all cryptocurrency transactions above EUR 1,000.

‍2. What information must VASPs collect and verify under the Travel Rule in Gibraltar?

‍VASPs must collect and verify full names, wallet addresses, and additional identifying information such as a physical address, national identity number, customer identification number, or date and place of birth for both originators and beneficiaries in Gibraltar.

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‍About Veriscope

‍Veriscope, the compliance infrastructure on Shyft Network, empowers Virtual Asset Service Providers (VASPs) with the only frictionless solution for complying with the FATF Travel Rule. Enhanced by User Signing, it enables VASPs to directly request cryptographic proof from users’ non-custodial wallets, streamlining the compliance process.

For more information, visit our website and contact our team for a discussion. To keep up-to-date on all things crypto regulations, sign up for our newsletter and follow us on X (Formerly Twitter), LinkedIn, Telegram, and Medium.