What is the Travel Rule, and which transfers does it cover?

The Travel Rule is the requirement in 31 CFR 1010.410(f) that, for a transmittal of funds of $3,000 or more, the transmittor's financial institution and any intermediary financial institution located within the United States include specified information in the transmittal order and pass it along. It applies to banks and nonbanks alike, and it does not bind the recipient's financial institution.

What the rule says:

• Who must comply: a transmittor's financial institution or intermediary financial institution located within the United States, for a transmittal of $3,000 or more (31 CFR 1010.410(f)). Paragraph (f) puts no such duty on the recipient's financial institution.
• Transmittor's institution: when it sends the order to a receiving financial institution, it must include the transmittor's name and, if the payment is ordered from an account, the account number; the transmittor's address (except for a Fedwire order until the sending bank completes its conversion to the expanded Fedwire format); the amount; the execution date; the identity of the recipient's financial institution; as many of the recipient's name and address, account number, and other specific identifier as are received with the order; and either the name and address or the numerical identifier of the transmittor's financial institution (31 CFR 1010.410(f)(1)).
• Intermediary institution: if it accepts an order, it must include the corresponding information in the order it sends to the next receiving institution, if received from the sender (31 CFR 1010.410(f)(2)).
• Safe harbor before the expanded Fedwire conversion: a transmittor's institution is deemed in compliance if it includes the amount, execution date, and recipient's institution identity, plus the recipient items to the extent received, and then provides the transmittor's name, account number, address, and its own identifier to an intermediary or recipient's institution within a reasonable time after a request tied to a lawful law enforcement or regulatory request or that institution's own Bank Secrecy Act program. Intermediaries have a parallel safe harbor, limited to information they received (31 CFR 1010.410(f)(3)).
• Excluded transfers: where the transmittor and recipient are each any of a bank, a wholly-owned domestic subsidiary of a U.S.-chartered bank, a broker or dealer in securities or its wholly-owned domestic subsidiary, a futures commission merchant or introducing broker in commodities or its wholly-owned domestic subsidiary, the United States, a state or local government, a government agency or instrumentality, or a mutual fund. Also excluded: transfers where the transmittor and recipient are the same person and both institutions are the same broker or dealer in securities (31 CFR 1010.410(e)(6)), and the bank exceptions, including the same person at the same bank (31 CFR 1020.410(a)(6)). All are carved out by 31 CFR 1010.410(f)(4).

What we would look at:

• Confirm the institution is located in the United States and acts as transmittor's or intermediary institution.
• Check the amount against $3,000 and each party against the exclusion list.
• Confirm each listed data element is captured and carried in the order.

Separately, recordkeeping is split: nonbanks follow 31 CFR 1010.410(e), and banks follow 31 CFR 1020.410(a). If your product is a stablecoin or crypto transfer, check how the rule applies to it, because this answer does not address that.

Sources

1. 31 CFR § 1010.410(f), (f)(1)-(2), (f)(4): https://www.law.cornell.edu/cfr/text/31/1010.410
2. 31 CFR 1010.410 (eCFR): https://www.ecfr.gov/current/title-31/section-1010.410

This answer is general information, not legal advice. Forteris is not a law firm.