Contrary to what institutions might expect, when it comes to implementing the FATF’s (Financial Action Task Force) travel rule, there may be risks and tradeoffs that need to be made.
Caitlin Long, founder and CEO of Avanti Financial Group, commented on the FATF guidelines and the possible trade-offs in terms of privacy for end-users once the KYC process is in full swing. Long claimed that there aren’t advanced enough encryption processes that can aid entities when they collect and transfer user data as part of the AML regulations.
She noted that in such a scenario, user privacy is likely to be a huge risk: “The industry is kind of stuck right now, trying to figure out what is the right encryption method for sharing that data. The whole Travel rule, just as a policy matter makes me nervous because data in motion is less secure than data at rest.”
Long added: “This is not a problem that’s unique to the crypto industry at all. Every KYC process for each bank is different and it’s a frustration, even for the largest, most well known mutual funds – they have the same problem as an individual.”