As the world’s financial landscape evolves, Bermuda is taking steps to ensure its digital asset sector stays ahead of international anti-money-laundering standards.

In advance of a critical mutual evaluation next year, the Bermuda Monetary Authority yesterday delivered a clear message to the industry: stringent new data requirements for digital asset transfers are now in force.

During an AML outreach webinar, BMA officials outlined regulatory updates to the so-called “travel rule”, otherwise known as Part Four of the Proceeds of Crime (AML and Anti-Terrorist Financing Supervision and Enforcement) Act 2008.

Luis Goncalves senior analyst, supervision (AML/ATF) at the BMA, clarified: “The travel rule requires regulated financial institutions, including digital asset businesses, to share specific customer data during fund transfers. This ensures full transparency through traceability and acts as a critical step towards improving accountability in digital finance.”

The travel rule, rooted in the Financial Action Task Force’s Recommendation 16, requires all payment transfers to include verified information about both the sender and recipient, officials said.

The regulation, introduced in 2012, has steadily evolved, with major milestones including the initial focus on wire transfers, further risk assessments of virtual currencies in 2014 and expanded guidance in 2018 to address the rise of digital assets.

In 2019, the travel rule’s reach was formally extended to cover virtual asset service providers. This year, the FATF updated its recommendations again to incorporate instant payments and all digital asset transactions.

These new requirements follow the latest FATF guidance, which calls for verification and seamless transmission of payer and payee information, not only within traditional banking but also across all digital asset transactions, with no exemption for transaction size.

Mr Goncalves emphasised: “Bermuda has responded proactively to these developments to ensure ongoing compliance with both the letter and the spirit of the FATF recommendations and guidance.”

With Bermuda’s Caribbean FATF mutual evaluation looming, the measures are meant to bolster industry resilience while positioning Bermuda as an international model for AML compliance, the officials said.

The changes mean all payment service providers operating in the jurisdiction must implement robust processes to verify, transmit, and record mandated information for each transaction, a move intended to maintain Bermuda’s reputation as a reputable international financial centre.

As Tyron Gounden, senior analyst AML/ATF supervision at the BMA, explained: “The risks of non-compliance include regulatory penalties, reputational damage, and operational disruptions, but benefits include enhanced reputation, regulatory alignment and long-term growth.”