Sumsub and Merkle Science Join Forces to Enhance Transparency in Virtual Asset Transactions

Merkle Science’s wallet monitoring feature will integrate into Sumsub’s Travel Rule solution, helping digital asset clients to better meet compliance requirements

Sumsub is partnering with Merkle Science, a predictive web3 risk and intelligence platform headquartered in Singapore, to strengthen its Travel Rule solution. Sumsub will integrate Merkle Science’s wallet monitoring feature into its Travel Rule solution to enhance transparency and help its digital asset clients accurately trace and identify the source of fund transfers with various Virtual Asset Service Providers (VASPs).

Travel Rule compliance is a crucial requirement in major jurisdictions, mandated by the Financial Action Task Force (FATF). Depending on the market(s) a VASP is transacting with, it may not know whether transactions exceed certain thresholds for Travel Rule legislation to be enforced. Sumsub’s Travel Rule solution, unveiled in March 2023, was designed to secure information transfers between VASPs and support all necessary Know Your Customer (KYC) checks, anti-money laundering (AML) screening and verification orchestration according to regulatory specifics and business needs. Merkle Science and Sumsub will seamlessly identify which institutions need to comply, while providing an additional verification layer through Sumsub’s AML and anti-fraud products.

 With the incorporation of Merkle Science’s wallet monitoring feature, Sumsub offers capabilities such as ongoing transaction monitoring, which enables real-time alerts for digital asset companies in case of a change in risk level. The enhancement simplifies compliance and verification processes, as it allows the identification of illicit activity by monitoring sanctioned transactions and analysing fund source and behaviour. Several countries in the Asia-Pacific (APAC) region have already incorporated the Travel Rule into their own legislation, and more are expected to follow. For instance, Singapore has integrated the Rule into its Payments Service Act (in effect since January 2020), mandating the verification of the identities of originator VASPs and the recording of KYC details before conducting fund transfers. In addition to government regulations, digital asset businesses are also recognizing the significance of the Travel Rule. According to Sumsub’s State of Verification and Monitoring in the Crypto Industry 2023 report, 56% of crypto businesses surveyed globally have plans to integrate the Travel Rule solution but have yet to complete this process.

“The costs of non-compliance should not be underestimated. Engaging with high-risk parties or facing enforcement action can not only lead to hefty financial losses but also long-term reputational damage and business closure for digital asset players. This underscores the importance of Travel Rule compliance,” says Penny Chai, VP of Business Development, APAC. “In order to meet Travel Rule compliance, it’s crucial VASPs have a clear understanding of their blockchain partners and their risk profiles. This requires implementing a combination of robust Know Your Business (KYB) and KYC processes, as well as having precise blockchain risk analysis. We are confident that teaming up with Merkle Science will streamline the compliance process, fostering trust and ensuring compliance throughout the industry.”

In the realm of digital assets and cryptocurrencies, building a robust and secure foundation is essential for their secure and enduring development. This is why, at Merkle Science, we’re excited to collaborate with Sumsub, a partner who shares our vision,” says Ian Lee, Director & Product Lead at Merkle Science. “With enhanced verification processes and monitoring, we anticipate playing a pivotal role with Sumsub in helping the digital asset industry reduce risk and achieve compliance in the long run.”

About Merkle Science

Founded in 2018, Merkle Science is the next-generation predictive crypto risk and intelligence platform that helps crypto businesses, DeFi participants, financial institutions, and government entities detect, investigate and prevent illegal activities across the Web3 ecosystem. 

Merkle Science’s proprietary Behavioral Rule Engine enables our tools to go beyond blacklists so that compliance teams may fulfill their local KYC / AML obligations and industry players may stay keep pace with the industry’s increasingly complex illicit activities.

Merkle Science envisions a world powered by crypto and is creating the infrastructure necessary to ensure the safe and healthy growth of the cryptocurrency industry as it becomes a key pillar of the $22 trillion financial services ecosystem.  We enable businesses to scale and mature so that a full range of individuals, entities, and services may transact with crypto safely.  For more information on Merkle Science, please visit our website and follow us on LinkedIn and Twitter.

  • November 8, 2023
  • Corporate

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