The Travel Rule – An Effective AML/CFT Tool Or An Expensive Data- Protection Liability?

Few obligations in the financial-crime rulebook command such broad acceptance, and attract so little scrutiny, as the Travel Rule. It began as a simple proposition within recommendation 16 of the FATF standards, that information identifying the originator and the beneficiary should travel alongside a transfer of value.

The Travel Rule can be traced back to the Financial Action Task Force’s (“FATF”) recommendation that originator and beneficiary information should travel alongside wire transfers. It takes its form as Recommendation 16 within the 40 Recommendations issued by the FATF to establish a robust framework to combat money laundering and the financing of terrorism (“ML/TF”).

As the financial industry evolved, so too did the FATF Recommendations have to adapt to an ever-changing landscape. We can look to the updates of the Recommendation in 2012 and, most recently, in 2019, which brought most payment infrastructures used by licenced institutions within scope, with the latter