Travel Rule

 

GENERAL

What is the Travel Rule?
The Travel Rule is a requirement that was introduced by the Financial Action Task Force (FATF) in 2019 to standardize coordinated approaches implemented by Virtual Asset Service Providers (VASPs). The implementation is to prevent financial transactions from being conducted through illicit means such as money laundering and terrorism financing.

The Travel Rule requires VASPs to share among themselves additional information of individuals or entities that are involved in the transactions (send/receive) of digital assets. This type of conduct already applies to traditional financial institutions like banks for over twenty years. When will the Travel Rule to be put in place? MX Global is to include the Travel Rule as a requirement in all digital assets’ transaction transfer (send and receive) tentatively in August 2022.

Who is the Financial Action Task Force (FATF)?
FATF is the global money laundering and terrorist financing watchdog. They are the intergovernmental policymaking body that sets international standards with aim to prevent money laundering and terrorist financing in which over 200 jurisdictions worldwide have committed to FATF standards

Who are the Virtual Asset Service Providers (VASPs)?
VASP is any natural or legal person who is not covered elsewhere under the Recommendations, and as a business conduct one or more of the following activities or operations for or on behalf of another natural or legal person:
● exchange between digital assets and fiat currencies;
● exchange between one or more forms of digital assets;
● transfer of digital assets;
● safekeeping and/or administration of digital assets or instruments enabling control over digital assets; and
● participation in and provision of financial services related to an issuer’s offer and/or sale of a digital asset.
MX Global is one of the VASPs.

What are the components of Travel Rule?
Travel Rule consists of components below:
1. Assessing whether the transaction is with a counterparty VASP or with an un-hosted wallet;
2. Collecting the required Originator and Beneficiary information;
3. Transmitting the required Originator and Beneficiary information to the counterpart VASP, when
applicable; and-
4. Verifying if the required Originator and Beneficiary information was received by the
counterparty VASP, when applicable

What is the Un-hosted Wallet?
An un-hosted wallet, also known as cold storage or self-custody, allows the user to maintain a digital asset balance outside of an exchange, like having banknotes in your own purse or wallet. Using a Ledger or Trezor hardware wallet, for example, or a mobile phone app such as Mycelium, or some software like Electrum.

Does the Travel Rule apply to me?
Yes, pursuant to the revision of the Guidelines on Prevention of Money Laundering and Terrorism Financing for Reporting Institutions in the Capital Market (SC’s AML Guidelines) in relation to wire transfer of digital assets (Travel Rule requirements) by the The Securities Commission Malaysia (“SC”) on 26 April 2021. Thus, it requires regulated (VASPs) to collect, verify, transmit and store certain information about the Originator and the Beneficiary of a transaction when transacting digital assets.

Why does MX Global implement the Travel Rule?
As one of the Registered Market Operators – Digital Asset Exchange (RMO-DAXs) in Malaysia, MX Global is subject to adherence to the regulation set by the SC. In terms of customer’s interest, Travel Rule would increase customer confidence towards MX Global in facilitating customers to send and receive digital assets by introducing additional checks around any attempted transactions so that the risk of sending digital assets to an incorrect address is reduced and keeping our customer’s funds safe such as from money laundering activities.

Will the Travel Rule make fees more expensive?
No, the Travel Rule implementation does not affect MX Global current fees charged to the customers.

Does MX Global disclose any of the information declared?
For your information, under the requirement of Travel Rule and for it to be fully utilized, MX Global may need to share the declared information with other VASPs when it is required. MX Global will only share the information with VASP that you have selected to send digital assets to and only VASP which is recognized and trusted by MX Global. In addition, to comply with legal and regulatory requirements, MX Global may also require to disclose the declared information to third parties. You can find more detailed information in our Privacy Policy.

 

SENDING DIGITAL ASSETS

What additional information do I need to provide when sending digital assets?
You are required to initiate transfer on MX Global and to include:

● Amount of digital asset; and
● Counterparty’s wallet address.
After the initial process, you are required to declare to whom you are sending the digital asset. During this step, you may have to declare:
● whether you’re sending digital asset to un-hosted wallet or to Exchange (to fill VASP’s name),
● whether the transaction is made to your own wallet, third party wallet, or institutional wallet,
● wallet’s beneficiary’s name, nationality, country of Residence (if you’re sending to third- party wallet),
● wallet’s institution’s registered name, country of incorporation, incorporation no (if you’re sending to institutional wallet).

RECEIVING DIGITAL ASSETS

What additional information do I need to provide when receiving a digital asset?
You are required to log into MX Global account and proceed to the Incoming Transfer function in the portal to claim the digital asset transferred. After the initial process, you are required to declare from whom you are receiving the digital asset. During this step, you may have to declare:
● whether the transaction is made from your own wallet, third party wallet, or institutional wallet,
● wallet’s originator’s full name, IC, nationality, and residential address (if you’re receiving from third-party wallet),
● wallet’s institution’s registered name and country of incorporation (if you’re receiving from institutional wallet).

What if I misspell the person’s name? Will I lose my digital assets?
It’s important that you provide us with the correctly spelt name. If you misspell someone’s name, you won’t lose your digital assets, but the transaction may be delayed or cancelled.

Which digital assets platforms can I send to?
Before our customers send to another Virtual Asset Service Provider (VASP), the Travel Rule requires MX Global’s compliance team to assess that VASP. You’ll also find them in a selection menu when you go through the digital assets send process.

What if the digital assets platform has multiple entities listed?
If you’re sending digital assets to a Virtual Asset Service Provider (VASP) with multiple country branches, try to be specific about the country branch. Please check which branch the recipient is a customer of. The VASP’s Terms of Use will usually have this information. If this information is not available, please select the most generic option.

What if I want to send to a platform that is not on the list?
You are still able to send digital assets to that platform from MX Global but you are required to provide the VASP details to us.

Can I send digital assets to a private wallet address (like Metamask or Ledger)?
Yes, subject that you have provided us with information required.