Unregistered VASP Flow

The unregistered VASP flow handles transactions to Virtual Asset Service Providers that are not yet registered in the TRP network but are known to operate as legitimate custodial services.

Flow Overview

graph TD
    A[1. Create Transaction] --> B[2. Create Unregistered VASP Entry]
    B --> C[3. KYC Approval for Beneficiary]
    C --> D[4. Add Originator Details]
    D --> E[5. Send to Beneficiary - Auto Skip]
    E --> F[6. Submit Transaction Hash]
    F --> G[Transaction Complete]

Key Differences from Standard Flow

1. VASP Discovery: Creates a record for the unregistered VASP
2. Limited Information Exchange: No direct VASP-to-VASP communication
3. Enhanced Documentation: Requires additional information about the unregistered VASP
4. Compliance Records: Maintains records for future VASP registration
5. Manual Verification: Enhanced due diligence for unregistered entities

Complete Step-by-Step Guide

Step 1: Create Transaction

Create a transaction destined for an unregistered VASP.

Endpoint: POST https://api.trpcontinuum.com/trp/transactions

{
  "network": "ethereum",
  "virtualAsset": "USDC",
  "amount": "1000.00",
  "beneficiaryWalletAddress": "0x742d35Cc6634C0532925a3b844Bc9e7595f0bEb4",
  "originatorWalletAddress": "0x5aAeb6053f3E94C9b9A09f33669435E7Ef1BeAed",
  "memo": "Payment to unregistered exchange",
  "transactionType": "unregistered_vasp"
}

Response:

{
  "success": true,
  "data": {
    "id": "txn_unreg_vasp_101",
    "status": "Pending Beneficiary Details",
    "network": "ethereum",
    "amount": "1000.00",
    "transactionType": "unregistered_vasp",
    "beneficiaryWalletAddress": "0x742d35Cc6634C0532925a3b844Bc9e7595f0bEb4",
    "createdAt": "2024-08-07T12:00:00Z"
  }
}

Step 2: Create Unregistered VASP Entry

Identify the beneficiary VASP as unregistered and provide known information.

Endpoint: POST https://api.trpcontinuum.com/trp/transactions/{transactionId}/add-beneficiary

{
  "unregisteredVaspWebsite": "https://unregistered-exchange.com",
  "unregisteredVaspName": "Unregistered Exchange Ltd",
  "unregisteredVaspCountry": "SG",
  "unregisteredVaspBusinessType": "cryptocurrency_exchange",
  "isLegalPerson": false,
  "beneficiaryFirstName": "Jane",
  "beneficiaryLastName": "Smith",
  "dateOfBirth": "1990-05-15",
  "placeOfBirth": "Singapore",
  "buildingNumber": "789",
  "streetName": "Orchard Road",
  "townName": "Singapore",
  "postCode": "238839",
  "country": "SG",
  "beneficiaryIdNumber": "S1234567A",
  "beneficiaryIdType": "NATIONAL_ID",
  "beneficiaryIdCountryOfIssue": "SG",
  "beneficiaryAccountNumber": "USER123456",
  "vaspVerificationData": {
    "licenseNumber": "SG-DPT-2023-001",
    "regulatorName": "Monetary Authority of Singapore",
    "licenseStatus": "active",
    "verifiedDate": "2024-08-07T12:00:00Z",
    "verificationMethod": "manual_research"
  }
}

Required Fields for Unregistered VASP:

• unregisteredVaspWebsite: Official website of the VASP
• unregisteredVaspName: Known business name
• unregisteredVaspCountry: Country of operation
• beneficiaryAccountNumber: User's account at the VASP

Response:

{
  "success": true,
  "data": {
    "transactionId": "txn_unreg_vasp_101",
    "status": "Unregistered VASP Identified",
    "unregisteredVaspInfo": {
      "tempId": "unreg_vasp_temp_456",
      "name": "Unregistered Exchange Ltd",
      "website": "https://unregistered-exchange.com",
      "country": "SG",
      "verificationRequired": true
    },
    "enhancedDueDiligenceRequired": true
  }
}

Status Change: Pending Beneficiary Details → Unregistered VASP Identified

Step 3: KYC Approval for Beneficiary

Approve KYC with enhanced due diligence for unregistered VASP.

Endpoint: POST https://api.trpcontinuum.com/trp/transactions/{transactionId}/kyc-check/approve

{
  "note": "KYC approved for unregistered VASP transfer with enhanced verification",
  "verificationLevel": "enhanced_plus",
  "additionalVerification": {
    "vaspLicenseCheck": "Verified operating license in Singapore - SG-DPT-2023-001",
    "websiteVerification": "Confirmed legitimate exchange website with SSL cert",
    "userAccountVerified": true,
    "regulatoryStatus": "Licensed Money Service Business in Singapore",
    "businessVerification": {
      "companyRegistration": "201234567G",
      "businessAddress": "789 Orchard Road, Singapore 238839",
      "incorporationDate": "2023-03-15",
      "directorVerification": "Completed background checks"
    }
  },
  "riskAssessment": {
    "overallRisk": "medium_high",
    "riskFactors": [
      "unregistered_in_trp_network",
      "regulatory_license_verified",
      "legitimate_business_operations",
      "enhanced_verification_completed"
    ],
    "mitigatingFactors": [
      "valid_regulatory_license",
      "established_business_presence",
      "verified_customer_account"
    ]
  },
  "complianceChecks": {
    "sanctionsScreening": "passed",
    "policyProhibited": false,
    "jurisdictionAllowed": true,
    "additionalMonitoringRequired": true
  }
}

Status Change: Unregistered VASP Identified → KYC Approved - Enhanced Plus

Step 4: Add Originator Details

Add complete originator information.

Endpoint: POST https://api.trpcontinuum.com/trp/transactions/{transactionId}/originator-details

{
  "isLegalPerson": false,
  "originatorFirstName": "John",
  "originatorLastName": "Doe",
  "originatorDob": "1985-03-20",
  "originatorPlaceOfBirth": "Chicago, IL",
  "originatorIdNumber": "987654321",
  "originatorIdType": "PASSPORT",
  "originatorIdCountryOfIssue": "US",
  "originatorAddressLine1": "456 Oak Street",
  "originatorCity": "San Francisco",
  "originatorState": "CA",
  "originatorPostalCode": "94102",
  "originatorCountry": "US",
  "relationship": "business_client",
  "transactionPurpose": "cryptocurrency_purchase",
  "sourceOfFunds": "salary_income"
}

Status Change: KYC Approved - Enhanced Plus → Originator Details Added

Step 5: Send to Beneficiary (Auto-Skip)

System automatically handles unregistered VASP logic.

Endpoint: POST https://api.trpcontinuum.com/trp/transactions/{transactionId}/send-to-beneficiary

{}

Automatic Behavior:

• Recognizes unregistered VASP flag
• Stores information for future VASP registration
• Creates compliance package for potential audits
• Prepares enhanced monitoring protocols

Response:

{
  "success": true,
  "data": {
    "transactionId": "txn_unreg_vasp_101",
    "status": "Ready for Transaction - Enhanced Monitoring",
    "unregisteredVaspHandling": {
      "skipReason": "no_direct_communication_channel",
      "compliancePackageCreated": true,
      "enhancedMonitoringEnabled": true,
      "futureRegistrationTracked": true
    },
    "monitoringRequirements": {
      "postTransactionReporting": true,
      "blockchainAnalytics": "enhanced",
      "periodicReview": "quarterly"
    }
  }
}

Status Change: Originator Details Added → Ready for Transaction - Enhanced Monitoring

Step 6: Submit Transaction Hash

Submit the blockchain transaction hash.

Endpoint: POST https://api.trpcontinuum.com/trp/transactions/{transactionId}/tx-hash-submit

{
  "txHash": "0x1234567890fedcba1234567890fedcba1234567890fedcba1234567890fedcba",
  "note": "Transaction sent to unregistered VASP with enhanced monitoring",
  "blockNumber": 18456792,
  "gasUsed": 65000,
  "transactionFee": "0.002",
  "confirmations": 3,
  "networkFee": "0.001",
  "actualAmount": "999.00",
  "additionalInfo": {
    "unregisteredVaspName": "Unregistered Exchange Ltd",
    "beneficiaryAccount": "USER123456",
    "monitoringLevel": "enhanced"
  }
}

Response:

{
  "success": true,
  "data": {
    "transactionId": "txn_unreg_vasp_101",
    "status": "Completed - Enhanced Monitoring",
    "blockchainInfo": {
      "txHash": "0x1234567890fedcba1234567890fedcba1234567890fedcba1234567890fedcba",
      "blockNumber": 18456792,
      "confirmations": 3,
      "networkFee": "0.001"
    },
    "completedAt": "2024-08-07T12:45:00Z",
    "transactionType": "unregistered_vasp",
    "ongoingMonitoring": {
      "enabled": true,
      "reviewSchedule": "quarterly",
      "alertsEnabled": true
    }
  }
}

Status Change: Ready for Transaction - Enhanced Monitoring → Completed - Enhanced Monitoring

Status Progression

1. Pending Beneficiary Details
2. Unregistered VASP Identified
3. KYC Approved - Enhanced Plus
4. Originator Details Added
5. Ready for Transaction - Enhanced Monitoring
6. Completed - Enhanced Monitoring

Enhanced Due Diligence Requirements

VASP Verification Process

Before approving transactions to unregistered VASPs:

1. License Verification

• Check Regulatory Status: Verify local regulatory registrations and licenses
• Contact Regulators: Confirm license validity with issuing authorities
• Verify Business Entity: Confirm legitimate business registration and incorporation

2. Website and Infrastructure Authentication

• SSL Certificate Verification: Verify secure website operation
• Domain Registration: Check domain ownership and registration history
• Social Media Presence: Confirm official social media accounts and activity

3. Business Operations Verification

• Physical Address: Verify actual business address and operations
• Key Personnel: Background checks on directors and key management
• Financial Standing: Review available financial information and stability indicators

4. Regulatory Risk Assessment

• Jurisdiction Analysis: Assess regulatory environment and compliance requirements
• Sanctions Screening: Verify entity and personnel are not sanctioned
• Law Enforcement Checks: Cross-reference with regulatory enforcement actions

Documentation Requirements

Maintain comprehensive records of:

VASP Research Documentation

• Regulatory license documentation: Copies of licenses and regulatory approvals
• Business registration documents: Incorporation certificates and business registrations
• Website verification records: Screenshots, SSL certificates, and domain verification
• Personnel background checks: Key management verification and screening results

Customer Due Diligence

• Enhanced identity verification: Additional documentation beyond standard requirements
• Account verification: Proof of legitimate account at unregistered VASP
• Transaction purpose documentation: Clear business rationale and supporting evidence
• Source of funds verification: Enhanced documentation of fund origins

Compliance Considerations

Regulatory Reporting

Unregistered VASP transactions may require:

Enhanced Reporting Requirements

• Immediate Suspicious Activity Reporting: For transactions meeting threshold criteria
• Quarterly Unregistered VASP Reports: Summary reporting to regulatory authorities
• Transaction Pattern Analysis: Regular review of activity patterns and trends
• Cross-Border Reporting: Additional requirements for international unregistered VASPs

Audit Trail Maintenance

• Complete decision rationale: Document reasoning for approving unregistered VASP transactions
• Compliance officer approvals: All transactions require senior compliance sign-off
• Risk assessment documentation: Comprehensive risk evaluation and mitigation measures
• Ongoing monitoring records: Documentation of post-transaction monitoring activities

Future VASP Registration Benefits

When an unregistered VASP joins the TRP network:

Data Migration and Integration

• Historical Transaction Linking: Connect past transactions to newly registered VASP
• Compliance Package Sharing: Provide accumulated compliance data to new VASP
• Retroactive Travel Rule Compliance: Verify historical transactions meet current standards
• Relationship Upgrade: Transition to standard VASP-to-VASP communication protocols

Enhanced Capabilities

• Direct Communication: Enable real-time VASP-to-VASP messaging and coordination
• Automated Compliance: Streamline future transaction processing and compliance checks
• Standard Limits: Apply regular VASP transaction limits and processing times
• Network Benefits: Access to full TRP network features and capabilities

Risk Management Framework

Transaction Limits and Controls

Implement strict limits for unregistered VASPs:

Risk Level	Daily Limit	Monthly Limit	Single Transaction	Additional Requirements
Low Risk	$5,000	$25,000	$2,500	Standard enhanced DD
Medium Risk	$10,000	$50,000	$5,000	Senior approval required
High Risk	$2,000	$10,000	$1,000	Executive approval, quarterly review

Enhanced Monitoring Requirements

Real-time Transaction Monitoring

• Sanctions Screening: Continuous screening against updated sanctions lists
• Pattern Detection: Automated detection of suspicious transaction patterns
• Velocity Monitoring: Enhanced limits and velocity checks for unregistered VASPs
• Cross-Reference Analysis: Compare with law enforcement and regulatory databases

Post-Transaction Monitoring

• Blockchain Analytics: Enhanced tracking of funds after transaction completion
• Destination Monitoring: Monitor receiving addresses for suspicious activity
• Follow-up Verification: Periodic confirmation of transaction legitimacy
• Quarterly Reviews: Regular assessment of unregistered VASP relationships

Common Unregistered VASP Types

1. Regional Exchanges

Local cryptocurrency exchanges not yet in global TRP networks

• Characteristics: Licensed locally, limited international presence
• Risk Level: Medium
• Verification Focus: Local regulatory compliance, business legitimacy

2. New Market Entrants

Recently launched cryptocurrency service providers

• Characteristics: New business, limited track record
• Risk Level: Medium to High
• Verification Focus: Business viability, management background, regulatory status

3. Specialized Services

Niche cryptocurrency service providers (OTC desks, institutional services)

• Characteristics: Specialized business model, limited public presence
• Risk Level: Medium
• Verification Focus: Business model verification, client base legitimacy

4. Cross-Border Services

International VASPs operating across multiple jurisdictions

• Characteristics: Multi-jurisdictional operations, complex regulatory structure
• Risk Level: High
• Verification Focus: Compliance across jurisdictions, regulatory coordination

5. Emerging Market VASPs

VASPs operating in developing cryptocurrency markets

• Characteristics: Limited regulatory framework, developing compliance standards
• Risk Level: High
• Verification Focus: Local regulatory environment, business sustainability

Best Practices

1. Comprehensive VASP Database

• Maintain Central Registry: Keep detailed records of all encountered unregistered VASPs
• Regular Updates: Periodically verify and update VASP information
• Information Sharing: Collaborate with other VASPs on unregistered entity intelligence
• Status Tracking: Monitor registration status and regulatory developments

2. Risk-Based Approach

• Graduated Verification: Implement verification levels based on risk assessment
• Dynamic Limits: Adjust transaction limits based on VASP verification level and track record
• Enhanced Monitoring: Apply appropriate monitoring based on risk level
• Regular Reviews: Periodic reassessment of risk levels and appropriate controls

3. Regulatory Engagement

• Authority Coordination: Regular communication with regulatory authorities about unregistered VASPs
• Industry Collaboration: Participate in industry groups focused on VASP registration and compliance
• Best Practice Sharing: Share experiences and best practices with other TRP participants
• Regulatory Updates: Stay current with regulatory developments affecting unregistered VASPs

4. Technology and Process Integration

• Automated Screening: Implement automated screening against regulatory and sanctions databases
• Workflow Integration: Integrate unregistered VASP handling into standard transaction workflows
• Documentation Systems: Maintain comprehensive audit trails and documentation systems
• Training Programs: Regular training for staff on unregistered VASP identification and handling

5. Customer Communication and Education

• Transparent Policies: Clear communication about unregistered VASP transaction policies and limits
• Educational Resources: Provide information about risks and benefits of registered vs unregistered VASPs
• Alternative Options: Offer guidance on registered VASP alternatives when appropriate
• Status Updates: Keep customers informed about VASP registration status changes