Software and digital platform provider EPAM Systems has joined forces with an association working to help crypto exchanges comply with tough rules laid out by the Financial Action Task Force (FATF).
EPAM, which provides digital products across a range of industries including finance, joined OpenVASP as an association member on Thursday, pledging to use its programming expertise to help crypto businesses comply with the FATF's "Travel Rule."
In June 2019, the FATF – an international money laundering watchdog – updated Recommendation 16 of the Travel Rule, which relates to the way in which data of the sender a financial transaction and its beneficiary is policed during wire transfers.
The rule change, which caused an outcry in the crypto industry, meant digital asset transactions at exchanges and similar entities – "Virtual Asset Service Providers" (VASPs) to use the FATF's parlance – were included as well.
In effect, transaction data above a certain threshold should be stored by VASPs for potentially sharing with other VASPs, as well as regulators and policing authorities, bringing a large compliance burden and raising potential privacy issues. While the FATF rules are guidance for the globe's regulators, nations that do not fall into line risk being blacklisted.
Since the 2019 ruling, crypto businesses have been trying to figure out how to comply with the Travel Rule.
The OpenVASP initiative, launched in November, seeks to provide a clear picture of FATF compliance based on an open-source protocol allowing for secure communication of sender and beneficiary information for crypto-asset transactions between VASPs.
That's where EPAM's induction into OpenVASP may help. The company aims to develop a second implementation of the protocol in Java to further help Virtual Asset Service Providers such as brokers, exchanges and banks, comply with the rule.
EPAM's implementation will follow the C# implementation already being developed OpenVASP founding members such as Bitcoin Suisse, Lykke, Seba Bank, Sygnum Bank, MME Legal and Avaloq.
“With alternative crypto assets becoming more mainstream, there is a need in the market to align investors, market participants and regulations to a common standard,” said Balazs Fejes, co-head of global business at EPAM, in a press release.
“OpenVASP provides a transparent, trusted protocol for reporting crypto-asset transactions, and we are pleased to partner with the association to support the open-source community and provide an innovative solution to this challenge,” Fejes added.