FinCEN proposes lower threshold for transaction data-gathering under FATF's 'travel rule' including those made with crypto


Newly proposed rule changes from the Financial Crimes Enforcement Network (FinCEN) and the U.S. Federal Reserve would, if approved, drop the transaction reporting threshold under the international "travel rule," including those made with cryptocurrencies and digital assets.

As noted in the proposed rule change document, the amendments "would reduce this threshold from $3,000 to $250 for funds transfers and transmittals of funds that begin or end outside the United States."

"FinCEN is likewise proposing to reduce from $3,000 to $250 the threshold in the rule requiring financial institutions to transmit to other financial institutions in the payment chain information on funds transfers and transmittals of funds that begin or end outside the United States." FinCEN clarified that the domestic threshold "remains unchanged at $3,000."

As well, the document includes a clarification to the rules to ensure that they are clearly applied to transactions involving cryptocurrencies and digital assets.

The document notes:

"The Agencies are also proposing to clarify the meaning of “money” as used in these same rules to ensure that the rules apply to domestic and cross-border transactions involving convertible virtual currency This document is scheduled to be published in the Federal Register on 10/27/2020 and available online at federalregister.gov/d/2020-23756, and on govinfo.gov (“CVC”), which is a medium of exchange (such as cryptocurrency) that either has an equivalent value as currency, or acts as a substitute for currency, but lacks legal tender status. The Agencies further propose to clarify that these rules apply to domestic and cross-border transactions involving digital assets that have legal tender status."

As previously reported, the "travel rule" applies to financial institutions that must transmit information between one another about those behind financial transactions above a certain size. Last summer, the Financial Action Task Force included in its 2019 guidance that cryptocurrency exchanges must adhere to the travel rule — a development that has kicked off a multi-faceted response to find ways to comply with the rule. 

Just this week, a white paper from a group of U.S. crypto businesses proposed a peer-to-peer messaging system through which they could share information about transactors. 

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Oct 15, 2021, 2:54AM UTC