CipherTrace Creates New Blockchain Solution For FATF’s Travel Rule Regulations
A blockchain developer called CipherTrade is set to launch a new solution that was created in order to help crypto companies to meet all the requirements of the Financial Action Task Force (FATF). The FATF, a famous international organization that fights money laundering, has recently announced new rules for its members, so the solution comes in a good time.
CipherTrace is set to team up with Shyft, a startup focused on creating a platform that will be used to store and prove identities using the blockchain technology. The two companies are set to work together in order to enable other companies to be compliant with the new “Travel Rule” created by the FATF at the same time that the clients will keep their privacy.
In order to do it, the two companies are set to create a Know Your Customer (KYC) platform that will together with an Anti-Money Laundering (AML) system and will let the participant companies transfer proof of knowledge between each other without needing to identify the information personally.
The New FATF Travel Rule
This new project was created after the Financial Action Task Force decided to announce its new recommendations for crypto. The entity works in 37 countries, so the rules will affect a considerable part of the world.
According to the new rules, companies that can be considered “virtual asset service providers”, which includes exchanges, will have to inform the FATF about their clients whenever they move funds between companies.
At the moment, the members have 12 months to adhere to the new rules and they will be reviewed after June 2020.
The Solution Created By CipherTrace
The main problem faced by the exchanges at the moment is that they lack the structure to meet these requirements. For instance, most companies have to way to share their KYC with other companies or to alert them of any kind of suspicious activity.
Shyft and CipherTrace have already started to create a pilot program that can help them to develop a system of shared smart contracts that could be used for companies as a solution to this problem.
Their goal is to make both KYC and AML considerably more efficient and to maintain a high level of privacy at the same time that security and shareability are enhanced. The information would only be revealed to other companies in case the authorities asked, so all privacy would be maintained this way.
Dave Jevans, the CEO of CipherTrace, has affirmed that with cryptographically controlled mechanisms, a company could preserve the system’s anonymity while helping the authorities to continue its fight against tax evaders, terrorists and other criminals.
According to him, it is the goal of the company to create solutions that can be used to preserve privacy at the same time that they can do what the FATF is asking.