In June 2019, the Financial Action Task Force (FATF) extended the “Travel Rule” to Crypto-Asset Service Providers (CASPs), such as Luno. In November 2024, the Financial Intelligence Centre (FIC) in South Africa issued a Directive, requiring CASPs to implement the Travel Rule for crypto asset transfers by 30 April 2025.
In South Africa, the Directive and Travel Rule requires a CASP to gather details about the recipient of a crypto transaction and to exchange information with the CASP on the other side of that transaction. If this sounds kind of familiar, the Travel Rule has applied to financial institutions like banks for over twenty years. Banks use the SWIFT system to interact with one another for this purpose.
As a South African Luno customer, the Travel Rule will now impact you when sending or receiving cryptocurrency. Here’s what you need to know.
What role does Luno play?
What are CASPs?
Luno and other businesses that offer crypto asset exchange facilities and allow customers to send and receive crypto are considered CASPs.
What is the purpose of the Travel Rule?
The Travel Rule requires CASPs to communicate with one another when a customer wants to transfer crypto between them. Similar to the obligations imposed on banks, the CASP responsible for the initial crypto send is required to transmit certain customer and transaction information to the CASP receiving the crypto. This exchange of information is aimed at mitigating the risk of crypto being used for money laundering or terrorist financing by ensuring that CASPs know where their customers are sending crypto to and receiving crypto from.
Luno’s view on the Travel Rule
While there remain a number of challenges associated with the Travel Rule, its objective of mitigating the risk of money laundering and terrorist financing using crypto is the right one.
The Travel Rule requires CASPs to ensure that they are properly identifying their customers and applying strong Know Your Customer (KYC) policies and practices. Luno has always adopted strong KYC policies and practices and is well prepared for this. We believe that by requiring these standards across the board, it will lead to higher customer confidence in CASPs and promote trust in the crypto asset industry as a whole.
Sending crypto to a wallet address without any further information can also be pretty scary for customers. Including the details of the recipient when sending crypto should feel quite familiar for most of our customers. Additionally, by introducing additional checks around those transactions, the risk of sending crypto to an incorrect wallet address is reduced.
Finally, we believe that the Travel Rule will help provide regulatory clarity and general trust in crypto asset transactions, ensuring broader and faster adoption. The decision to extend the Travel Rule to CASPs signifies an acknowledgement that the crypto industry has earned its place in today’s financial system. It also presents an opportunity to continue shaping that financial system going forward. At Luno, where our mission is to upgrade the world to a better financial system, we’re confident that we’re on the right path to achieve this.
What this means for you
If and when you go to send crypto to anyone, Luno will ask you to provide the name of the person or entity that you’re sending crypto to, and the name of that person or entity’s CASP. Once we have this information, Luno will securely send payment instructions to the CASP you are sending to. These instructions will include the details you have provided about the recipient as well as certain information about you. This will include your name and, depending on the specific requirements in your country and the value of your transaction, information such as your address and identity number.
API customers will initially need to manually send to an address via the app. This instruction is clearly provided in the API. Recurring sends to that address will then be able to proceed via API without any app dependency.
To meet our Travel Rule obligations, Luno is working alongside Notabene. Notabene has developed a privacy-preserving compliance platform to help CASPs interact with one another securely and to comply with the Travel Rule. This will ensure that your Luno experience is as smooth as ever, your data is stored securely, and that everything runs seamlessly in the background.
