In a recent report addressing anti-money laundering and counter-terrorist funding (AML/CTF) efforts, the UK Financial Conduct Authority (FCA) has emphasized its focus on the cryptocurrency sector.
According to the report released by the UK Treasury on May 1, the FCA views crypto firms, alongside retail and wholesale banks, and wealth management firms, as particularly susceptible to financial crime and at high risk of exploitation through money laundering.
Increased Focus The report highlights the FCA’s growing attention to the crypto industry over the past years. Between 2022 and 2023, the FCA allocated a significant portion of its resources towards AML/CTF efforts, with 30% of its workforce, equivalent to 52.8 full-time financial crime specialists, dedicated to supervising crypto businesses.
During this period, the FCA’s financial crime specialists conducted 231 desk-based reviews and seven onsite visits. Additionally, other supervisory teams initiated 375 cases, including 95 cases related to crypto.
The FCA introduced new requirements for the crypto sector, such as financial crime reporting (REP-CRIM) obligations. It utilized REP-CRIM data in conjunction with other sources, including crypto blockchain analytics, to enhance risk identification and targeted interventions.
Since January 2020, the FCA has been overseeing AML compliance for crypto businesses, including exchanges and custodial wallets. The report highlights the agency’s rigorous assessment process, resulting in several rejections and withdrawals among applicants, thereby enhancing confidence in approved companies with strong controls.
Broader UK Crypto Regulation While the report reflects on past activities, it also outlines future initiatives.
Charlotte Vere, Baroness Vere of Norbiton, mentioned that the FCA will soon unveil details about the future structure of the supervisory system following a 2023 consultation. She stated:
“We are committed to implementing an ambitious and impactful program of changes to AML/CTF supervision.”
These changes align with other regulatory and enforcement measures in the UK. Recently, UK law enforcement gained expanded powers to seize crypto, and in October 2023, the FCA introduced stringent regulations on crypto promotion and advertising.
The UK is also exploring more flexible policies, including a regulatory sandbox, allowing companies to utilize digital ledger technology (DLT) under adapted rules and regulations.
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