TRP Lets VASPs Accept or Reject Transfers Before They Occur

TRP’s Advanced Workflow gives virtual asset service providers (VASPs) power at their fingertips. In a tripart effort, the OpenVASP Association and the Travel Rule Protocol Working Group (TRPWG) have solved many compliance pains led by 21 Analytics. A transaction can be accepted or declined before its actual execution with a click of a button, resulting in time saved, extra diligence from the VASP and further compliance with the Financial Action Task Force’s (FATF’s) Travel Rule.  

How does this function help VASPs? Let’s start from the top. 

What Is the TRP Advanced Workflow? 

The TRP Advanced Workflow provides further flexibility and decision-making power to VASPs. They now have the option to decide which transactions to accept or reject with a click of a button.

Meaning that they can see exactly where a transaction comes from and decide whether they want to accept it or decline it, avoiding unwanted transfers. 

Why Does This Benefit VASPS - to Accept or Decline Transactions? 

1. VASPs can see which country a transaction is originating from. For example, the VASP can immediately decline the transaction if this country is on a sanctions list. 

2. They can also see who the transaction is originating from; should the person be on a watch or sanctions list, the transaction can be declined. 

3. It can also help VASPs in more straightforward situations; perhaps the VASP does not trade in the specified currency, or the value of the transfer is too low. A simple click and the transfer is rejected.

4. Not only does this save valuable time, but it also leads to further due diligence from the VASP’s side, as they can inspect the transaction details before going ahead with the transaction. This includes names, physical addresses, etc., reiterating points 1 and 2. 

5. Another security aspect is that the payment address is only visible after the payment has been accepted. This further eliminates mistakes and unwanted transactions.  

The Advanced Workflow differs from its predecessor, the Enhanced Workflow, in the sense that the originator VASP can now only gather this information after the transaction has been approved. 

Of course, the transaction could be cancelled by the VASP, but this was additional work for the VASP. 

Who Is the Travel Rule Protocol Working Group?  

The TRPWG are the designers of the Travel Rule Protocol (TRP). TRP is a protocol for compliance with the FATF Travel Rule Recommendations. Basically, it is the rules for transmitting the Travel Rule data between entities in a standardised manner. TRP is a widely adopted standard offered by different software vendors. 

Who Is the OpenVASP Association? 

OpenVASP is dedicated to advancing scalable solutions for compliance within the industry. It is a network - a crypto-financial messaging protocol - that aids VASP to VASP communication. A VASP can verify their identity and join the OpenVASP directory. 

While the protocol was robust, it lacked certain key features, such as the complete flexibility that their clients needed and sought a solution. 

Earlier this year (2022), OpenVASP and the TRPWG teamed up. The partnership leverages the OpenVASP Association’s governance and the TRPWG’s protocol developments. Together, they brainstormed and came up with a solution to solve this. Enter the Advanced Workflow. 

The end result of the OpenVASP and the TRPWG collaboration was indeed something great for VASPs.