UK FCA Issues AML Compliance and Risk Obligation Reminder to Crypto Firms 17

UK FCA Issues AML Compliance and Risk Obligation Reminder to Crypto Firms

  • Britain’s top watchdog has released a statement reminding cryptocurrency companies in the country of their obligations when providing digital asset services.
  • The notice focused on seven key points including crypto-asset business registration.
  • UK’s Central Bank has also announced its crypto regulatory framework.

UK’s Financial Conduct Authority (FCA) published a notice to regulated institutions that offer digital asset exposure to investors in the country on Thursday. The announcement comes ahead of the March 31, 2022 registration deadline set for crypto firms in compliance with anti-money laundering (AML) policies.

In the latest announcement from Britain’s top financial regulatory agency, seven areas of risk are outlined for firms to consider when offering digital asset products and services. They include ensuring customers understand all available services offered by the regulated firm, financial crime, and registration of crypto-asset businesses. 

The FCA’s notice also covers industry-standard risk mitigation systems, prudential considerations, custody considerations, and compliance with broadly accepted policies through local and foreign engagement.

FCA Crackdown on Unlicensed Crypto Firms

Earlier in March, the FCA expressed concerns over the number of unregistered crypto businesses operating within its jurisdictions. According to the regulator, more than 170 digital asset firms were found offering services to investors without any approval or license.

The FCA followed up its concerns with a deadline for firms to submit applications and secure a spot on the AML crypto-asset register. However, the new policy supposedly triggered widespread confusion regarding compliance and the process for regulatory approval as some virtual asset companies have started to exit England’s jurisdiction.

Bank of England Releases Updated Crypto Regulatory Framework

As cryptocurrency adoption and investment booms across the globe, reports suggest that British authorities have amped up efforts to protect investors and provide sufficient oversight for the burgeoning crypto industry within its borders.

UK’s central bank, the Bank of England (BOE), released an update to its policies geared towards policing crypto operations in the country. The BOE recognizes that crypto adoption doesn’t pose a significant danger.

However, England’s apex bank opined that a framework designed to combat the inherent risks connected to cryptocurrencies and decentralized finance remains necessary. An excerpt from the report reads:

With respect to crypto-assets, their associated markets and activities (such as crypto-asset derivatives), including decentralized finance (DeFi)..the FPC will seek to ensure that risks to financial stability arising from those markets and activities are mitigated. It will do so by undertaking regular assessments of both the potential risks posed by crypto-assets and DeFi and the regulatory initiatives that are currently underway to mitigate them, as well as making recommendations where appropriate.