The European Court considers that each case must undergo individual evaluation. The agency contradicts the FATF “travel rule”.
Europe-based cryptocurrency exchanges are not under an obligation to share customer data with their US counterparts, according to a statement in a European court. This is in contravention of the Financial Action Task Force (FATF) “travel rule”.
In a recent statement, the Court of Justice of the European Union says that each case (of sending data) must undergo individual evaluation, without establishing the automatic sending of information. Although the provision does not make a direct allusion to exchanges or the FATF travel rule, it contradicts the nature of the regulations of the international agency. The latter seeks to establish a sustained flow of data between cryptocurrency exchanges.
The so-called “travel rule” was based on a proposal by the International Financial Action Task Force. According to this extension of the know-your-customer (KYC) policies, not only users of cryptocurrency exchange websites would share their data with the platform where they register, but also these platforms should exchange those data with each other.
In its document, the European court expresses its views on sending data to the North American country. The agency considers that the USA does not meet the same standards of respect for privacy that exist among European countries.
The entity’s assessments start from the General Data Protection Regulation (GPDR), which “establishes that the transfer of such data to a third country can, in principle, take place only if the third country in question guarantees an adequate level of data protection.”
This declaration of the Court is based on the case of Maximillian Schrems, an Austrian citizen who filed a claim with the Irish regulatory authority against the dependency of Facebook in that country. Schrems complained that the company shared his data with Facebook’s base of operations in the USA.
In the Court’s opinion, the Irish agency’s decision to reject the claim was correct since in that case, the US authorities ensured the protection of those data correctly. However, they consider that the US legislation generally does not give these guarantees, unlike the regulations in force in Europe, the aforementioned GPDR.
For this reason, the Court considers that European companies have no obligation to share their customers’ data with their US counterparts unless there are contractual terms that so require it.
Under this provision, European cryptocurrency exchanges will not have to exchange data with their US peers, despite what the FATF stated. However, they could exchange data with their European peers, since they are under the same GDPR. For that reason, there would more likely be an adequate level of data protection.
Adoption of FATF Travel Rule
The FATF regulations are not binding on the countries that comprise the international agency. However, these countries tend to follow them without further resistance, since regulators of the world’s largest financial systems make life in the organization.
In July 2019, it became known that the G20 countries, including the European Union, would adopt this regulatory proposal. This happened despite appeals from representatives of exchanges, who expressed their concern over the new provisions.
At that time, the FATF was under the presidency of the USA. However, the European Court’s statement came after the financial regulatory agency had a change of command, with Germany assuming the presidency in early July.
By Alexander Salazar
