The Isle of Man implemented the Travel Rule in October 2024. Its implementation, Travel Rule Code 2024, aligns with the requirements set out by the FATF’s Recommendation 16.
Code 2024 falls under the Proceeds of Crime Act 2008 and section 68 of the Terrorism and Other Crime (Financial Restrictions) Act 2014 (section 157).
What is the scope of the Travel Rule in the Isle of Man?
The Travel Rule applies to any natural or legal person who can be defined as a VASP or offers any VASP services or activities on behalf of or for any other natural or legal person.
VASP activities include:
exchange between virtual assets and fiat currencies;
exchange between one or more forms of virtual assets;
transfer of virtual assets;
safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; and
participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.
[Schedule 4 to the Proceeds of Crime Act 2008]
The Travel Rule is also applicable to intermediary VASPs, which are virtual asset service providers that provide exchange, transfer, safekeeping, and/or administration services to or for the virtual asset service provider of the originator or beneficiary but do not have a business relationship with either the originator or the beneficiary.
The Travel Rule does not apply to:
transfers where both originator and beneficiary hold accounts with the same VASP;
transfers where the originator and beneficiary are the same person and hold multiple accounts at the same VASP;
transfers between two VASPs who are acting on their own behalf.
Who is the supervisory body for VASPs in the Isle of Man?
The Isle of Man Financial Services Authority (IOMFSA)
What is the Travel Rule threshold in the Isle of Man?
EUR 1000
Following Recommendation 16, VASPs must share verified information about the originator and beneficiary and retain said information.
Obligations of originator virtual asset service providers
When sending virtual assets to another VASP, the originator VASP must obtain and hold the information listed below. This information must be submitted immediately and securely with the virtual asset transfer.
originator’s name;
originator’s unique account identifier, or unique transaction identifier;
originators’ address OR national identity number OR date and place of birth;
beneficiary’s name;
beneficiary’s unique account identifier, or unique transaction identifier.
For transactions under EUR 1000, the originator's address, official personal document number, and date and place of birth need not be provided.
Batch transfers are permitted. In the event of such a transfer, the information mentioned above does not need to accompany each transaction, provided:
each virtual asset transfer within the batch has a unique identifier (account or transaction identifier), and
the batch is accompanied by the remaining Travel Rule information specified above.
When dealing with a legal entity, the below information is to be obtained and held:
the registered name, or if there is no registered name, the trading name;
the unique account identifier, or if there is no unique account identifier, the unique transaction identifier, and
the registered office address, or if different, or if there is none, the principal place of business.
Obligations of beneficiary virtual asset service providers
When receiving a transfer, the beneficiary VASP is responsible for ensuring that all Travel Rule information has been received and that this information is accurate and consistent with its records regarding the beneficiary’s data.
The beneficiary VASP must also have effective risk-based policies and procedures in place for identifying missing or incomplete data or data that is inconsistent with the relevant person’s records.
Moreover, it must have a strategy in place for
determining whether to apply the virtual asset transfer to the beneficiary’s unique account;
determining the appropriate follow-up action to ensure compliance with this Code, and
considering whether to make an internal disclosure.
Self-hosted Wallets
The Travel Rule Code does not directly cover self-hosted wallets. In the event of a self-hosted wallet transfer with a VASP, the VASP is required to request Travel Rule data from its client.
The Code does not explicitly require a form of self-hosted wallet verification.
How to comply with the Isle of Man's Travel Rule and meet AML requirements
The request for VASPs to obtain the required Travel Rule data constitutes a customer due diligence measure within the meaning of the AML/CFT Code.
Paragraphs 33 to 35 of the AML/CFT Code shall apply to a relevant person who sends or receives a virtual asset. Any person who fails to comply with the requirements of paragraph 33 of the AML/CFT Code concerning that information shall be guilty of an offence under paragraph 42 of that Code.
All obtained Travel Rule data must be made available to the Isle of Man Financial Intelligence Unit on request.
When do you need to comply with the Travel Rule in the Isle of Man?
Now. The Travel Rule came into effect on 28 October 2024.
Which regulations are applicable to the Travel Rule in the Isle of Man?
Travel Rule (Transfer of Virtual Assets) Code 2024 which falls under the Proceeds of Crime Act 2008, Terrorism and Other Crime (Financial Restrictions) Act 2008.
Anti-Money Laundering and Countering the Financing of Terrorism Code 2019
Designated Businesses (Registration and Oversight) Act 2015 along with the Designated Businesses (Amendment) Order 2024 (Schedule 1 to the DBROA).
