The FATF Travel Rule is one of the main reasons exchange-facing crypto flows now trigger heavier compliance checks. In June 2019, FATF extended Recommendation 16 to virtual asset service providers (VASPs), which means exchanges and custodial providers must exchange sender and recipient identity data for qualifying transfers. In practice, this turns many crypto transfers into messaging events between compliance systems, not just blockchain broadcasts.
For privacy users, the practical distinction is simple: self-custody by itself is not the same thing as a reporting obligation, but the moment funds interact with regulated VASP rails, identity and screening requirements usually apply.
What VASPs Must Collect
- Originator name, account (wallet) identifier, and physical address or national ID.
- Beneficiary name and wallet identifier.
- Screening against sanctions/terror financing lists before executing the transfer.
When both sides are VASPs, this information must be exchanged securely and fast enough to satisfy transaction monitoring requirements. Most operators now handle this through dedicated Travel Rule APIs and vendor middleware.
Impact On Mixers & Privacy Wallets
- Exchanges now treat deposits from mixers or CoinJoin coordinators as “unhosted wallet” transfers, triggering enhanced due diligence.
- Some jurisdictions (e.g., Singapore, Switzerland) require VASPs to confirm the owner of the destination wallet before releasing funds.
- Chain-analysis vendors built Travel-Rule compliance modules that flag mixer-linked UTXOs automatically.
Implementation Status
Implementation is now widespread, but not identical across countries. Many jurisdictions adopted FATF-aligned requirements through local AML updates, while threshold details, verification methods, and enforcement style still vary by regulator. In the U.S., existing MSB frameworks carried much of the early burden, with additional proposals such as the dedicated mixing-service reporting track covered in our FinCEN rulemaking page.
Takeaways For Privacy Users
Assume any transfer touching a regulated exchange will pass through Travel Rule screening and may trigger enhanced due diligence. Keep lawful source-of-funds records, maintain clear wallet labels, and avoid sending freshly mixed outputs directly into high-surveillance VASP flows when alternatives exist.
References
- FATF Guidance for a Risk-Based Approach to Virtual Assets and VASPs (2019)
- MAS explainer on Singapore’s implementation
Author
NotATether
Bitcoin privacy researcher and maintainer of BitMixList. Focused on mixer history, enforcement timelines, and practical privacy workflows for users operating in high-friction jurisdictions.
