Navigating the EU’s Transfer of Funds Regulation

On 30 December 2024, the updated Transfer of Funds Regulation (TFR), the EU’s version of the Travel Rule, took effect, applying to crypto-asset service providers (CASPs) and ensuring EU-wide regulation is aligned with Financial Action Task Force (FATF) Recommendation 16.

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The TFR ensures CASPs in the EU are subject to the same anti-money laundering (AML) and counter-terrorist financing (CTF) requirements and supervision as credit and financial institutions and requires them to share information on the originator and beneficiary at each end of a transfer.

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To support CASPs with TFR compliance, the European Banking Authority (EBA) has published Guidelines on:

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• ‍information requirements in relation to transfers of funds and certain crypto-assets transfers,‍
• the characteristics of a risk-based approach to AML/CTF supervision, and the steps to be taken when conducting supervision on a risk‐sensitive basis,‍
• customer due diligence and the factors to consider when assessing ML/TF risks associated with business relationships and transactions, and‍
• internal policies, procedures and controls.

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To facilitate compliance with the EU’s revised TFR and EBA Guidelines, VASPnet has prepared a downloadable checklist for CASPs that outlines critical measures to:

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• identify and assess counterparty risks,
• choose an appropriate Travel Rule Solution Provider (TRSP),
• enhance AML and customer due diligence policies, and
• implement systems and tools for mandatory data collection.

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The following checklist is designed to help CASPs:

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• involved in the transfer of crypto-assets,
• that are established, or have their registered office in the European Union, and
• that operate within transfer chains involving at least one CASP.