August 25, 2020
During a recent proposal, the FCA lays out its plan to obligate UK crypto exchanges and wallets to fill in a form explaining their money.
The UK’s top financial regulator wants to force all cryptocurrency exchanges and wallet suppliers to function in the nation to produce reports about potential money laundering.
In a policy proposal published today, the UK’s Financial Conduct Authority (FCA) said that it plans to extend the obligations it imposes on firms to inform it about money laundering risks. The FCA started requiring annual crime reports of financial institutions back in 2016.
Stated in a policy proposal recently, the UK’s Financial Conduct Authority (FCA) said that it plans to extend the obligations it executes on firms to enlighten it about money laundering risks. The FCA started requiring every twelve months of crime reports of financial institutions back in 2016.
Based upon the new proposal, all “cryptoasset exchange providers and custodian wallet providers” must provide the FCA with a report about their financial crime risk, “irrespective of their total annual revenue.”
The plan is, for now, just that—a proposal. The FCA is seeking commentaries until November 23 and plans to publish a policy statement containing its new rules, by the first quarter of 2021.
According to the proposal, information to be requested includes the number of the firm’s customers in “high-risk” dominions, the number of customers who “refused or exited for financial crime reasons,” and “the top three most prevalent frauds.”
Under the projected guidelines, crypto companies must provide the information “from their next accounting reference date sometime after January 10 2022.” This date is a little far ahead than other companies since cryptocurrency companies have until January 10, 2021, to record with the FCA.
Cryptocurrency companies are often listed in tax havens like the Cayman Islands, but they usually function worldwide. The FCA defines “operates” as “where the firm carries on its business or has a physical presence through a legal entity.”
The FCA wants to acquire the data from these companies to guarantee that its “resources are targeted at firms that carry on activities that pose potentially higher [money laundering] risks.”
The supplementary data requested would be the latest in a string of obligations compulsory on cryptocurrency companies by regulators. The European Union launched the fifth anti-money laundering directive (AMLD5) in January, which required cryptocurrency companies to take grander action to stop money launderers.
Lastly, the Financial Action Task Force, an international financial crime watchdog, “recommended” (in practice, demanded, since the FATF would brand non-compliant countries with an unsightly black mark) that crypto companies will have to share information on the subject of their customers when processing transactions to other crypto companies. The endorsement was supposed to be enforced by June, but the FATF has given its members—most of the world’s major economies—some relaxed because of the pandemic.