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Netki, a provider of KYC-AML compliance tools for crypto and blockchain firms, has announced that it has updated its TransactID solution to ensure compliance with the FATF “Travel Rule.”
In June, the Financial Action Task Force (FATF) issued its guidance which states that businesses managing cryptocurrency would have to gather, hold, and transfer information about the identity of the originator and beneficiary involved in any transaction.
Regulatory authorities, including the US FinCEN and Switzerland’s FINMA, have already begun to extend Travel Rule requirements.
Launched in 2016, Netki's TransactID uses open-source standards to enable a secure, encrypted, peer-to-peer exchange of identity information between parties prior to transactions. This allows Virtual Asset Providers (VASPs) to capture and transfer the information required by the Travel Rule, while maintaining the privacy of individuals' identities and the integrity of the blockchains on which the transactions take place.
Justin Newton, CEO and co-founder of Netki, said that the company has developed a way to ensure compliance without disrupting the business, adding that TransactID is a “comprehensive solution that doesn't require a huge investment, and adds zero transaction costs.”
"VASPs are concerned, and rightly so, that FATF regulations threaten the very principles of privacy and distributed ledgers on which cryptocurrencies are founded. TransactID enables them to comply with regulatory disclosure requirements without interfering with the blockchains or threatening the fungibility of their underlying tokens," said Newton.
The TransactID solution builds on the Bitcoin Improvement Protocol, BIP 75 – a peer-to-peer protocol, based on open standards, which is available for anyone to use and is compatible with both custodial and non-custodial wallets. Also, it uses X.509 certificates to exchange ID information between transacting parties and their VASPs.
Netki claimed that TransactID is the only peer-to-peer compliance solution for VASPs that's been in production since 2016. The solution can be customized to include whichever pieces of identity information each VASP chooses to store and exchange, as determined by its compliance policies
"In all likelihood, the Travel Rule is just the first regulation that [VASPs] will encounter. Sanctions and OFAC compliance will follow in the future, and our product can easily accommodate it," said Newton.
