Additional AML Obligations of VASPs: KYT and KYV | AML UAE

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Combining virtual assets and AML compliance, we have heard of new terms like Know Your Transaction and Know Your Virtual Asset Service Provider (VASP).

Know Your Customer (KYC) is a crucial requirement in AML regulations of UAE. All regulated entities, including Virtual Asset Service Providers (VASPs), must know their customers thoroughly to detect suspicious transactions. In addition, VASPs must also implement the “Know Your Transactions (#KYT)” and “Know Your Corresponding VASP (#KYV)” measures while executing transactions related to virtual asset transfer.

The video here explains the KYT and KYV procedures in detail.

A VASP’s requirement to know their transactions and corresponding virtual asset service providers are aligned with the FATF’s recommendations for virtual asset transactions.

In addition to knowing their customers, virtual asset service providers must also know their transactions. This enables you to detect any suspicions in virtual asset transfer.

In virtual asset transfers, generally, two VASPs are involved, one originating and another beneficiary VASP. Thus, virtual asset service providers must identify and verify the identity of the corresponding VASP involved in the virtual asset transaction.

Let us detail the elements of ‘know your transaction’ and ‘know your corresponding VASP.’

A virtual asset service provider can apply adequate KYT measures to know the transaction by collecting details on the following elements:

🔸You must have the identification details of the originator and beneficiary of the virtual asset transfer

🔸You must know the IP address with the associated time stamp

🔸It is also crucial to know the transaction hashes

🔸The related virtual wallet addresses of the originator and beneficiary

🔸Information on the device identifier (the device which has been used to originate the transaction)

🔸Geo-location of the devices involved

In addition to knowing your transaction, you must also know your corresponding VASP.

To know your corresponding VASP, you must collect the following information:

🔸The first thing is the name of the virtual asset service provider

🔸If the VASP is an entity, the trade license details are essential

🔸Date and place of establishment of the entity

🔸Address of the establishment in both the UAE and the home country is necessary

🔸A copy of the memorandum of association and article of association

🔸You must understand the regulations applicable to VASPs and registration requirements thereunder

🔸Details of the domain names owned or managed by the VASP

🔸Name and other details of the primary regulatory authority governing the VASP

🔸You must also gather all the information on the AML CFT procedures implemented by the corresponding VASP

🔸It is also crucial to have an understanding of the corresponding VASP’s compliance with the FATF travel rule

By collecting information on all these aspects, virtual asset service providers can prepare the risk profile of the corresponding VASP. You can also understand the VASP’s activities across multiple blockchains, including frequency and volume of transactions, specifically of high-risk transactions or illegal activities.

UAE AML regulations and #FATF mandate the #VASPs to collect necessary details about the transaction and the corresponding VASP. This will enable the VASP to detect the red flags in transferring virtual assets from one wallet to another.

Hope this video helps you understand the elements of KYT and KYV.

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Timestamps:
0:00 Introduction on KYT and KYV
0:42 Brief on VASPs and its types
1:25 Know Your Transaction
2:03 Know your virtual asset service provider
3:18 Conclusion and regards

#AMLUAE #uaeaml #knowyourtransaction #virtualasset #amlrisks #amlcompliance #antimoneylaundering #amlcft #uae