UK’s Regulator FCA to Monitor Money Laundering and Terrorism Finance via Crypto

Financial Conduct Authority supervises Crypto

The UK’s Financial Conduct Authority (FCA) now supervises companies and business working with crypto for anti-money laundering (AML) and counter terrorism finance (CTF) compliance.

In an announcement released on January 10th, the financial regulator said that it will supervise whether businesses dealing with cryptocurrencies and blockchain in the UK are complying with the relevant rules and regulations to curb money laundering and terrorism finance efforts.

The FCA also put forth a list of requirements for crypto-related businesses. The list includes rules like identification and assessment requirement for AML and CTF purposes, having policies and systems in place to mitigate the risk of being used for money laundering, and undertaking customer due diligence when entering into a business relationship.

The announcement reads:

“We 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.”

Furthermore, the agency will require any new businesses dealing with crypto assets to register with them first. Existing businesses who have been working with crypto assets before January 10th 2020 will be allowed to continue under the condition that they implement compliance with the ‘Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017’ (MLRs) immediately.

However, they will still need to file an application for registration with the FCA before June 2020. The announcement said that all businesses working with crypto assets must be registered by January 2021. The application for registration can be submitted online through the application form linked with the announcement.

Global Regulators Were Slow to Respond to Illicit Crypto Activities

Anti-money laundering and counter terrorist financing have been two of the biggest issues that mainstream financial institutions have had with cryptocurrencies over the years. Bitcoin has long been accused of allowing terrorist organizations to be able to make financial moves with complete anonymity. Furthermore, reports have also claimed in the past that a lot of black money earned through illegal activities has been moving in and out of countries through cryptocurrencies.

The G20-sponsored Financial Action Task Force (or FATF) has been adamant about financial regulators on the national level across the world, pushing to define clear guidelines for cryptocurrency exchanges to root out money laundering and terror financing through them.

Some countries like China and India have had knee jerk reactions to any news of illegal activity carried out through cryptocurrencies and immediately banned all crypto-related activities. Other regulators across the spectrum have been slow to introduce legislature that discourages AML/CTF activities while also promoting growth in the sector.

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