Cryptocurrency exchanges Bitfinex is preparing to test out a new Anti-Money Laundering (AML) tool on its platform.
The firm announced Wednesday that it will be testing a new solution designed for complying with the “Travel Rule,” an AML/Counter Financing of Terrorism regulation for financial institutions introduced by the Financial Action Task Force (FATF) in 2019.
Bitfinex partnered with compliance startup Notabene to implement its software-as-a-service solution to identify virtual asset accounts, track cross-border transactions and comply with other broad obligations of Virtual Asset Service Providers (VASPs). The integration will supposedly allow the firm to ensure privacy while collecting and managing Travel Rule-related data.
According to the announcement, the solution allows Bitfinex to share, send and receive counterparty information alongside blockchain transactions to any counterparties using the same infrastructure. Bitfinex’s sister company Tether, which operates the world’s largest stablecoin Tether (USDT), has also begun using Notabene’s solution.
Paolo Ardoino, chief technology officer at Bitfinex and Tether, said that Bitfinex has “always taken a leading role in meeting new global regulatory requirements.”
Notabene CEO Pelle Braendgaard told Cointelegraph that the firm launched its travel rule solution in August 2020. The service is currently processing transactions between at least 50 different exchanges, including Paxful, Luno, BitSo, OnChain Custodian and others.
Notabene has been running tests across many jurisdictions, including a pilot with the Financial Services Regulatory Authority of Abu Dhabi Global Market in early October.
“With this updated Guidance, FATF is increasing the urgency yet also acknowledging the real-world issues VASPs and Travel Rule service providers like us have pointed out to them over the last year. They are now recommending that regulators be flexible during the initial rollout,” Braendgaard said.
Braendgaard added that Travel Rule compliance is growing rapidly every quarter, and the firm expects major VASPs to comply by the first or the second quarter of 2022.
Since releasing the crypto Travel Rule more than two years ago, the FATF has continued working on the framework to improve it and fit the growing cryptocurrency industry. In February, the authority issued a review document to adapt its Travel Rule guidance for stablecoins and crypto peer-to-peer transactions.