Language Barriers in Wire Transfer Regulation: Why the World Still Can't Agree

In the fragmented world of financial crime compliance, language has become a surprising obstacle. Regulators and international bodies remain divided not only in enforcement priorities but in how they name and frame core concepts. Nowhere is this more visible than in the inconsistent terminology surrounding the wire transfer rule (WTR) and funds transfer rule (FTR), and the overlapping use of CASP (Crypto Asset Service Provider) versus VASP (Virtual Asset Service Provider). These inconsistencies are not merely semantic; they obstruct coordination, confuse reporting entities, and create exploitable regulatory gaps.

WTR vs FTR: Same Rules, Different Names?

At first glance, the distinction between WTR and FTR might appear benign. The Wire Transfer Rule is commonly associated with the Financial Action Task Force (FATF) and its Recommendation 16, which sets global standards for originator and beneficiary information in cross-border transactions. The Funds Transfer Rule, on the other hand, stems from the Bank Secrecy Act (BSA) and is the terminology adopted by the Financial Crimes Enforcement Network (FinCEN) in the United States.

Both rules are nearly identical in intent: they aim to trace the flow of funds through the financial system to deter money laundering, terrorist financing, and other illicit activity. Yet, their divergence in nomenclature creates practical confusion. Compliance teams must map local terminology to international standards, often relying on interpretive guidance to determine whether one rule's requirements satisfy another's expectations.

This becomes more problematic when considering virtual assets. The FATF’s Travel Rule has now been extended to cover virtual asset transfers, applying WTR principles to crypto. FinCEN, meanwhile, uses the FTR terminology in its proposed updates to include convertible virtual currencies. Such parallel evolution without coordinated terminology risks duplication, misunderstanding and fragmented implementation.

CASP vs VASP: Europe & the FATF Drift Apart

A similar schism is unfolding in the realm of crypto compliance. The FATF coined the term Virtual Asset Service Provider (VASP) in its 2019 guidance to describe any entity facilitating virtual asset transfers, exchange, custody or issuance. This definition was deliberately broad and functional, designed to encompass a wide range of services in a fast-moving sector.

The European Union, however, has opted for a different term under its Markets in Crypto-Assets (MiCA) Regulation: the Crypto Asset Service Provider (CASP). CASP is more than a linguistic rebranding. It introduces a specific registration regime and contains a more granular list of services, including trading platforms, custody services, portfolio management, and even crypto advisory activities.

While there is clear overlap, CASPs and VASPs are not synonymous. This misalignment creates difficulties for firms operating across jurisdictions. An entity regulated as a CASP in the EU may not meet the full scope of a VASP under FATF’s broader criteria. Equally, regulators implementing FATF standards without tailoring for MiCA may fail to account for critical services that facilitate financial crime.

The UK: Caught Between Frameworks

The UK sits uncomfortably between global and regional approaches, reflecting both its ambitions for post-Brexit regulatory independence and its need to remain aligned with international standards. This duality has produced a hybridised position on both wire transfer terminology and the regulation of crypto service providers.

• WTR vs FTR: A Quiet Convergence

In matters relating to the wire transfer regime, the UK largely follows the FATF’s Wire Transfer Rule through the implementation of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, commonly known as the MLRs. Regulation 64, which covers the information accompanying transfers of funds, is directly modelled on FATF Recommendation 16.

The UK does not use the term Funds Transfer Rule, aligning instead with FATF language. However, it does not always mirror FATF’s guidance verbatim. Enforcement relies on supervisory bodies such as the Financial Conduct Authority (FCA), which interpret obligations within the broader scope of the UK's risk-based regime. As such, UK firms may not always find clear one-to-one alignment with FinCEN’s interpretation under the BSA. This creates complexity for firms operating across both jurisdictions, particularly in correspondent banking and payment services.

• CASP, VASP & the Post-Brexit Fork

When it comes to crypto regulation, the UK's path diverges more noticeably. The UK government and the FCA have not adopted the EU’s MiCA framework, and thus do not use the term CASP. Instead, the FCA refers to cryptoasset businesses, as defined under the MLRs. These entities must register with the FCA if they carry out activities including crypto exchange or custody services.

The UK has informally aligned with FATF’s VASP terminology through its 2021 consultation on the extension of the Travel Rule to crypto, and the subsequent Crypto Travel Rule legislation, which came into force in September 2023. The implementation obliges UK-based crypto firms to collect and verify originator and beneficiary information for relevant transfers, even when counterparties are based in jurisdictions without equivalent Travel Rule regimes.

This position effectively places the UK closer to FATF-aligned jurisdictions such as Singapore and Switzerland, rather than the EU’s CASP-based model. Yet the UK has not fully clarified whether its cryptoasset definitions are exhaustive in scope, nor whether they will evolve to cover decentralised finance, NFTs or staking-as-a-service.

• Strategic Ambiguity or Regulatory Gap?

The UK’s approach can be described as strategically pragmatic, maintaining enough alignment to meet FATF standards and preserve access to international markets, while preserving flexibility in regulatory design. However, this position also invites uncertainty. Without a clear and consistent lexicon, firms often struggle to map UK regulatory requirements to global frameworks. Moreover, as other jurisdictions formalise definitions and licensing regimes, the UK's bespoke terminology may become a compliance outlier rather than a competitive advantage.

The Financial Services and Markets Act 2023 included provisions to bring cryptoassets into the regulatory perimeter, signalling that further refinement is likely. However, until the UK publishes a consolidated framework akin to MiCA or the US Treasury’s digital asset strategy, it risks being caught in a terminological limbo: too vague for international harmonisation, too fragmented for regulatory innovation.

Regulatory Incoherence as a Compliance Risk

The absence of a unified lexicon creates unnecessary friction in cross-border compliance. Multinational institutions must navigate a patchwork of regulatory definitions, often reinterpreting the same underlying obligations through different legal and linguistic lenses.

For crypto compliance officers in particular, this lack of clarity can lead to overcompliance in some jurisdictions and undercompliance in others. It also complicates technical implementation. Travel Rule solution providers, for instance, must design systems flexible enough to accommodate VASP, CASP and other local variations, delaying rollout and increasing cost.

From a supervisory perspective, inconsistent terminology undermines regulatory equivalence. Countries cannot confidently assess each other’s compliance with FATF standards if they use divergent frameworks. This opens the door to regulatory arbitrage, where firms route transactions through jurisdictions with the weakest definitions or narrowest scopes.

Toward a Common Financial Crime Vocabulary

Achieving global agreement on terminology may seem trivial compared to broader challenges like beneficial ownership transparency or the misuse of shell companies. But the current state of regulatory language is an avoidable source of confusion that benefits bad actors more than compliance professionals.

FATF, the EU and other standard-setters should urgently prioritise terminological convergence, or at minimum, provide interoperability frameworks that map regional terms against global standards. Clear, harmonised definitions would not only improve enforcement outcomes but also help the private sector build consistent, auditable compliance infrastructure.

In a financial system increasingly shaped by digitisation, the stakes are high. As new technologies blur the lines between payment systems, custody and asset issuance, ambiguous terms are more than just jargon. They are vulnerabilities.

Until the global regulatory community agrees on a shared language, financial crime compliance will remain a Tower of Babel: fragmented, inefficient and perpetually behind.

Conclusion: Words Matter More Than We Think

Regulatory language is not a matter of style. It is the foundation upon which compliance frameworks, enforcement cooperation and industry standards are built. In the global fight against financial crime, inconsistent terminology weakens the system at precisely the points where clarity is needed most.

The disconnect between WTR and FTR, and the divergence between CASPs and VASPs, illustrate a deeper structural problem: an absence of coordinated rulemaking in a world where financial flows are borderless. The UK's halfway stance exemplifies the difficulty of aligning local policy ambitions with international obligations.

For regulators, convergence must become a strategic priority. For regulated entities, especially those operating across multiple jurisdictions, adaptability remains essential. But without a common vocabulary, the global response to financial crime will continue to be fractured, reactive and slower than the criminals it seeks to catch.

A shared language will not solve everything. But without one, we risk losing control of the conversation entirely.