Netki has upgraded its digital identity service to help cryptocurrency firms meet tough new international standards for combating money laundering.
Announced Monday, the upgrade to TransactID adds two new features: The ability to break down certificates of a user’s identity into smaller pieces of personally identifiable information (PII); and the ability for senders and receivers of money to request PII from each other.
“Before, there was, like, one large, atomic transaction where each side shared all of the information about each other with each other,” Justin Newton, CEO of Netki, told CoinDesk. “Now the protocol allows for more of a conversation where each side can request and share individual pieces of identity information with each other.”
The change comes in response to recommendations released in June by the Financial Action Task Force (FATF), an intergovernmental body devoted to fighting money laundering and terrorism financing. They require “virtual asset service providers” (VASPs), including crypto exchanges, to pass information about their customers to one another when transferring funds between firms so law enforcement has an information trail.
While FATF standards aren’t binding, its 37 member countries are expected to put them into practice through regulation or legislation, and the organization gave them 12 months to do so.
Indeed, even before the FATF guidance dropped, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), stated that the “travel rule” already applied to crypto exchanges, just as it long has for other financial institutions.
TransactID was originally designed primarily with the U.S. in mind, but now that FATF has applied the travel rule to crypto, Netki has made the product customizable to account for differences in how countries interpret the guidance.