Anti-money laundering, know your customer, the travel rule and sanctions

Real estate has always been one of the favourite channels for money laundering. A property bought in cash and resold a few years later turns funds of dubious origin into presentable wealth. That is why notaries, estate agents and banks have long been subject to due diligence obligations. Digital assets, through their speed, their cross-border nature and the pseudonymity of their addresses, have added a further layer of risk. RWA sit at the crossroads of these two worlds. They inherit the requirements of both.

Compliance in the fight against money laundering and terrorist financing determines whether a project can exist at all. A serious failing in this area leads to the withdrawal of licences, the termination of banking relationships and sometimes criminal prosecution.

The international principles

The Financial Action Task Force, the FATF, an intergovernmental body created in 1989, sets the global standards for combating money laundering. Its forty recommendations are transposed into the law of most countries. Since 2019, its Recommendation 15 has extended these standards to virtual asset service providers, requiring in particular the transmission of information on the originator and beneficiary of each transfer, the famous travel rule. The FATF regularly assesses countries and publishes lists of jurisdictions with strategic deficiencies, with which business relationships call for enhanced due diligence.