Dubai looks for greater transparency over virtual asset ‘Travel Rule’ implementation

A circular (8-page / 503KB PDF) issued by Dubai’s Virtual Assets Regulatory Authority (VARA) sets out its supervisory expectations for virtual asset service providers (VASPs) regarding their implementation of the Travel Rule. It clarifies how VASPs must collect, verify, transmit and retain data about both originator and beneficiary for any qualifying virtual asset transfers.

For batched transfers, each individual transfer within the batch must be accompanied by the appropriate information, according to the circular. It also sets out VARA’s expectations for unhosted wallets and related verification procedures, along with intermediary providers, confirming that non-compliance with the Travel Rule can result in enforcement action being taken.

Marie Chowdhry, a fintech expert with Pinsent Masons, said the new guidance marked a clear tightening of VARA’s expectations around virtual asset transfers in the UAE.

“For the first time, VASPs have a concrete picture of what “good” implementation of the Travel Rule looks like, from the level of due diligence expected, to how missing information should be handled, to verifying whether a counterparty VASP is properly regulated in or outside the UAE,” she added.

“It also ties into the UAE’s wider push to reinforce its AML/CFT regime following the 2025 Federal Decree‑Law and its implementing regulations.

“VARA is clearly applying a risk‑based approach: VASPs are expected to assess the risk of each transfer, apply proportionate controls and ensure the required information actually travels with the transaction.

“The focus on transparency is evident: the ban on privacy tokens, for example, reflects a consistent approach taken by other UAE regulators based on the view that their inherent opacity is incompatible with traceability and effective financial crime prevention.

VASPs which operate under VARA’s framework should now review their existing controls around anti-money laundering and asset transfers to make sure they comply with the expectations surrounding the Travel Rule, she added.