Travel Rule

The "Travel Rule" is a global anti-money laundering standard that has been implemented in Malaysia under the purview of Bank Negara Malaysia (BNM) and the Securities Commission (SC). It requires institutions that handle digital assets to collect, verify, and share customer information during transactions to prevent financial crimes.

The Core Requirement in Malaysia

The rule mandates that Reporting Institutions (the official term for entities like RMOs for digital asset exchanges and wallet providers in Malaysia) must share specific information about the sender and recipient when transferring digital assets to another institution.

In simple terms, when you send cryptocurrency from your account on a Malaysian exchange to an account on another exchange, your exchange is legally required to send your identification details along with the transaction.

What Information "Travels" with the Transaction?

Under Malaysian regulations, the following information must be transmitted for digital asset transfers:

• Sender's (Originator's) Information:
  • Full Name
  • Wallet address
  • Physical address or another unique identifier (like a national ID number)
• Recipient's (Beneficiary's) Information:
  • Full Name
  • Wallet address

Why is the Travel Rule Necessary for Digital Assets?

The primary goals are to:

• Increase Transparency: It reduces the anonymity of VASP-to-VASP transactions, making it harder for illicit actors to hide their activities.
• Prevent Financial Crime: It creates a clear audit trail that helps law enforcement investigate and prevent money laundering, terrorist financing, and sanctions evasion.
• Align with Global Standards: It brings the digital asset industry in line with the same compliance standards expected of the traditional financial system, fostering greater trust and legitimacy.

Disclaimer: This information is for general guidance only and does not constitute financial or legal advice.