Slovakia -- Travel Rule Implementation Regulatory Overview

Slovakia, as a member of the European Union, has incorporated the FATF Travel Rule requirements into its national anti-money laundering and counter-terrorist financing (AML/CFT) framework, primarily driven by the transposition of the 5th EU Anti-Money Laundering Directive (5AMLD) and subsequent national legislative updates.

Here's a breakdown of the FATF Travel Rule implementation in Slovakia:

FATF Travel Rule Implementation in Slovakia

1. Adoption Status:

• Adopted: Yes, Slovakia has adopted the FATF Travel Rule principles into its national law. This was primarily achieved through amendments to its AML/CFT legislation, transposing the 5th EU AML Directive (Directive (EU) 2018/843), which extended AML obligations to virtual asset service providers (VASPs).
• EU Context: The upcoming Markets in Crypto-Assets (MiCA) Regulation, expected to apply fully in the EU by late 2024/early 2025, will further standardize and strengthen the Travel Rule implementation across all EU member states, including Slovakia. MiCA incorporates the FATF Travel Rule requirements directly within its framework for crypto-asset transfers.

2. Effective Date:

• The key amendments to Slovak AML law that brought virtual asset service providers under the AML/CFT regime, including Travel Rule-like obligations, came into effect on 1 March 2020. This was through Act No. 397/2019 Coll., which amended the primary AML Act.

3. Threshold Amounts:

• Slovakia's AML law, consistent with the 5AMLD and FATF guidance, generally requires the collection and transmission of originator and beneficiary information for all virtual asset transfers executed by a VASP, regardless of the amount.
• However, specific thresholds can apply in certain contexts:
  • For transactions involving a VASP and an unhosted (self-hosted) wallet, the VASP is typically required to collect information about the customer (and potentially the unhosted wallet owner if the amount exceeds a certain threshold) when the transaction value is €1,000 or more.
  • For VASP-to-VASP transfers, the Travel Rule applies to all transfers, with no de minimis threshold for collecting and transmitting the required information.

4. Which VASPs Are Covered: The Slovak AML Act defines "provider of services related to virtual currency" as an obligated entity. This broadly covers:

• Entities that exchange virtual currencies for fiat currencies (and vice versa).
• Entities that exchange one or more virtual currencies for one or more other virtual currencies.
• Custodial wallet providers (entities that provide services to safeguard private cryptographic keys on behalf of their customers, to hold, store, and transfer virtual currencies).
• Entities providing transfer services for virtual assets.
• Other services that facilitate the issuance, sale, or transfer of virtual assets.

These VASPs are required to register with or obtain a license from the National Bank of Slovakia (Národná banka Slovenska - NBS) or other relevant authorities, depending on the nature of their services.

5. Technical Implementation Requirements: The Slovak AML Act (and MiCA in the future) mandates the following for covered VASPs:

• Information Collection: VASPs must collect and verify specific information about both the originator and beneficiary of a virtual asset transfer:
  • Originator: Name, account number (or virtual asset wallet address), physical address, national identity number (or customer identification number), date and place of birth.
  • Beneficiary: Name, account number (or virtual asset wallet address).
• Information Transmission: The originating VASP must transmit the collected originator and beneficiary information to the beneficiary VASP immediately and securely with the virtual asset transfer.
• Information Retention: VASPs must retain the collected information for a period of 5 years after the business relationship ends or after an occasional transaction.
• Due Diligence: Perform customer due diligence (CDD) on their clients, which includes identifying and verifying their identity and understanding the nature of their business.
• Monitoring and Reporting: Monitor transactions for suspicious activity and report any suspicious transactions to the Financial Intelligence Unit (FIU) of the Presidium of the Police Force (Finančná spravodajská jednotka Prezídia Policajného zboru).

While the law specifies what information to collect and transmit, it generally does not prescribe specific technical solutions (e.g., TRISA, Sygna, Travel Rule Protocol). VASPs are expected to adopt compliant technologies that enable secure, immediate, and reliable transfer of the required data.

6. Penalties for Non-Compliance: Non-compliance with AML/CFT obligations, including Travel Rule requirements, can lead to severe penalties under Slovak law:

• Fines: Significant administrative fines can be imposed on both legal entities (VASPs) and responsible individuals. Fines for legal entities can range from thousands to millions of Euros, depending on the severity and recurrence of the breach.
• Withdrawal of License/Registration: The National Bank of Slovakia or other competent authorities may revoke or suspend the operating license or registration of a VASP.
• Criminal Charges: In cases of serious or intentional breaches, particularly those linked to actual money laundering or terrorist financing, criminal charges may be brought against individuals involved.
• Reputational Damage: Non-compliance can lead to significant reputational damage, loss of customer trust, and exclusion from the financial system.

Relevant Legislation and Guidance:

1. Act No. 297/2008 Coll. on Protection Against Legalisation of Proceeds of Crime and Against Financing of Terrorism (AML Act): This is the primary legislation in Slovakia governing AML/CFT. It has been amended multiple times, most notably by Act No. 397/2019 Coll., which transposed the 5AMLD and extended its scope to virtual assets and VASPs.

   • Slovak-Lex (official legislative portal): https://www.slov-lex.sk/pravne-predpisy/SK/ZZ/2008/297/ (Slovak language, consolidated text)

2. National Bank of Slovakia (Národná banka Slovenska - NBS): The NBS is the primary supervisory authority for many financial institutions in Slovakia, including some VASPs. They issue guidance and oversee compliance.

   • NBS Information on Virtual Currencies (Slovak): https://www.nbs.sk/sk/spotrebitel/financne-trhy/virtualne-meny (Mentions regulatory oversight and AML obligations for virtual asset service providers.)

3. FATF Recommendations: The international standard for AML/CFT. Recommendation 15 (New Technologies) and 16 (Wire Transfers, now extended to Virtual Assets) are particularly relevant.

   • FATF Recommendations: https://www.fatf-gafi.org/recommendations.html
   • FATF Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (June 2019, updated March 2021): Provides detailed guidance on applying the Travel Rule. https://www.fatf-gafi.org/publications/fatfrecommendations/guidance-rba-virtual-assets.html

4. EU 5th AML Directive (Directive (EU) 2018/843): The directive that mandated EU member states to bring VASPs under their AML/CFT regimes.

   • Official Journal of the European Union: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32018L0843

5. EU Markets in Crypto-Assets (MiCA) Regulation (Regulation (EU) 2023/1114): While not fully effective yet, MiCA will be the overarching EU regulation for crypto-assets, including robust Travel Rule provisions.

   • Official Journal of the European Union: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023R1114