UK FCA Becomes AML Supervisor for Crypto Asset Activities

Ricardo Esteves

Ricardo Esteves has seen business and economics through many lenses. He joined the Financial Services Industry in 2009, and has been a financial journalist since 2011. He holds a degree in Business Administration and has experience producing real-time news, from both buy-side and sell-side, as well as for retail traders, brokers and service providers. Esteves' work has appeared in a variety of online publications including FX Street and FinanceFeeds.

Crypto Asset

UK FCA Becomes AML Supervisor for Crypto Asset Activities

January 14, 2020

UK FCA UK Financial Conduct Authority has announced it is now the anti-money laundering and counter-terrorist financing (AML/CTF) supervisor for businesses carrying out certain crypto asset activities under the amended Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs).

The UK FCA will proactively supervise firms’ compliance with the new regulations and will take swift action where firms fall short of desired standards and cause risks to market integrity. The financial watchdog requires any UK business conducting specific crypto asset activities which fall within scope of the regulations to comply with a number of rules, including: identify and assess the risks of money laundering and terrorist financing which their business is subject to; have policies, systems, and controls to mitigate the risk of the business being used for the purposes of money laundering or terrorist financing; where appropriate to the size and nature of its business, appoint an individual who is a member of the board or senior management to be responsible for compliance with the MLRs; undertake customer due diligence when entering into a business relationship or occasional transactions; apply more intrusive due diligence, known as enhanced due diligence when dealing with customers who may present a higher money laundering/terrorist finance risk. This includes customers who meet the definition of a politically exposed person; undertake ongoing monitoring of all customers to ensure that transactions are consistent with the business’s knowledge of the customer and the customer’s business and risk profile.

The Financial Conduct Authority demands the following UK businesses undertaking cryptoasset to register new businesses carrying out cryptoasset activity in the scope of the MLRs must be registered with the FCA before conducting businesses. You can find out more about the registration process on our website. Existing businesses already conducting cryptoasset activity before 10 January 2020 may continue their business but will need to ensure their compliance with the MLRs with immediate effect.

All existing businesses undertaking cryptoasset activities must be registered by January 2021. To ensure this deadline is met, these businesses must submit a completed application for registration via Connect by June 2020. Existing Financial Services and Markets Act firms, e-money institutions or payment services businesses undertaking cryptoasset activity will also be required to apply for registration.

In October 2019, the World Federation of Exchanges (WFE), the global industry group for exchanges and CCPs, asked the FCA not to ban the sale of crypto derivatives to retail consumers. An outright ban, under current proposals, would envelop regulated exchanges and CCPs who operate under stringent regulations to provide pre- and post-trade risk management standards which are designed to foster safe and efficient markets, the WFE stated.

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