US Travel Rule Updates: Jurisdictional Obligations for 2025 Adherence

In the ever-evolving world of finance, one standard remains a crucial pillar in the fight against money laundering and terrorism financing – the Travel Rule. The Financial Action Task Force (FATF) continues to revise its guidance on this global standard, potentially shaping the future of the Travel Rule in the US.

The Travel Rule, based on FATF Recommendation 16, applies to virtual asset service providers (VASPs) and money services businesses (MSBs) that handle virtual assets, including cryptocurrency exchanges, custodial wallet providers, and crypto ATMs. Any financial institution or entity acting on behalf of a client needs to comply with the Travel Rule in the US when transaction volume exceeds $3,000.

FinCEN, the US regulator, has clarified that existing Bank Secrecy Act (BSA) Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) requirements for transfers apply to convertible virtual currency (CVC) transactions. This means that VASPs and MSBs must collect and transmit originator and beneficiary details when they transmit virtual assets for transfers over $3,000.

However, implementing the Travel Rule comes with a host of challenges. VASPs and MSBs face potential hurdles such as mismatched interpretations, incomplete or inconsistent data, non-responsive counterparties, and a lack of interoperability and scope.

Enter Sumsub, a solution offering the widest connectivity on the market, supporting five major Travel Rule protocols. Sumsub's user-friendly platform supports the collection, verification, and secure transmission of originator and beneficiary information, helping VASPs and MSBs operating in the US to meet evolving FinCEN requirements.

The US stablecoin market is projected to swell to $2 trillion by 2028, according to the Treasury Secretary. With nearly one in four American adults (22%) owning virtual assets as of 2025, the need for robust compliance solutions like Sumsub becomes increasingly important.

The GENIUS Act, signed into law on July 18, 2025, marked the creation of the first federal framework for stablecoin issuance. As the US regulatory landscape continues to evolve, US policymakers are exploring ways to detect and mitigate illicit finance risks involving digital assets, including the use of AI in AML/CFT and sanctions compliance.

In addition to federal regulations, the US operates under a federal system, and states can also impose additional requirements for VASPs and MSBs that operate in their jurisdictions. For instance, FinCEN has proposed reducing the de minimis Travel Rule threshold for cross-border CVC transactions from $3,000 to $250 in the United States.

Non-compliance with the Travel Rule can lead to severe penalties, including fines and potentially imprisonment, depending on the severity of the violation. Violations related to money laundering and financial regulations generally carry penalties of up to five years in prison or substantial fines. However, specific penalties for Travel Rule violations may vary depending on the exact circumstances and enforcement actions by regulatory authorities.

As the landscape of digital assets continues to grow, the importance of compliance solutions like Sumsub becomes increasingly evident. By providing a seamless and comprehensive solution for VASPs and MSBs, Sumsub is helping to ensure that the US remains a leader in combating money laundering and terrorism financing while fostering a secure and thriving digital asset ecosystem.