"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," FCA press release.
The UK Financial Conduct Authority (FCA) has become the anti-money laundering and countering the financing of terrorism (AML/CFT) supervisor for some types of crypto assets businesses. These will need to meet certain requirements, including applying "enhanced due diligence" when dealing with new higher-risk customers. Crypto actors will also have to register with the FCA, with timeframes depending on whether they are new to this space or are already conducting business.
What has happened?
The development comes under the amended Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs) and, among other things, crypto-asset businesses will now need to:
identify and assess the risks of money laundering and terrorist financing (ML/TF) to which they are subject to;
have policies, systems, and controls to mitigate the ML/TF risks;
where appropriate to the size and nature of its business, appoint 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;
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.
UK businesses dealing with crypto assets must also register with the FCA, as follows:
new businesses carrying out crypto-asset activity in the scope of the MLRs must be registered with the FCA before conducting businesses – registration forms are available on Connect.
businesses already conducting crypto-asset activity before 10 January 2020 may continue their business but will need to comply with the MLRs immediately.
Existing Financial Services and Markets Act firms, e-money institutions, or payment services businesses undertaking crypto-asset activity will also be required to apply for registration.
All existing businesses undertaking crypto asset activities must be registered by January 2021.
Written by Giacomo Breda