UK's Financial Authorities Focuses on Crypto Financial Crime
The FCA flagged 375 potential financial crime cases, 95 of which were bonded explicitly to crypto assets
May 2, 2024 10:15 AM
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TL;DR In 2023, the UK's Financial Conduct Authority (FCA) allocated nearly a third of its financial crime specialists to monitor crypto-asset businesses, highlighting concerns over money laundering risks. This move is part of a broader strategy to ensure consumer protection and maintain a fair crypto market, including implementing stricter advertising rules and comprehensive surveys to assess anti-money laundering controls within the sector.
The Financial Conduct Authority (FCA), the UK's financial watchdog, has intensified its scrutiny over the crypto asset sector in 2023, dedicating around 30% of its financial crime specialists to this area.
This decision came after the FCA conducted risk assessments across various sectors, identifying retail banking, wholesale banking, wealth management, and crypto-asset firms as the most susceptible to financial crimes such as money laundering.
As part of its efforts to combat financial crime, the FCA's specialists conducted a comprehensive series of reviews. This included 231 desk-based analyses and seven on-site visits.
Furthermore, the FCA's supervisory teams flagged 375 potential financial crime cases, with a significant 95 cases related explicitly to crypto assets. Notably, the regulator extended a crucial survey, known as REP CRIM, to crypto businesses in April 2022 to gather detailed information on their anti-money laundering (AML) controls.
Since January 2020, the FCA has been the AML watchdog for UK crypto businesses, enforcing a strict evaluation process for new registrations.
This rigorous scrutiny has led to the rejection or withdrawal of many applications due to inadequate anti-money laundering controls.
The FCA's commitment to consumer protection and the integrity of the crypto market is evident in its March business plan.
The plan outlines the regulator's focus on identifying and addressing market abuse and promoting a competitive financial sector in the UK within the global landscape.
This includes enhanced oversight of financial promotions, with a significant increase in the removal of misleading advertisements last year following the implementation of stricter rules for high-risk investments in July 2023.
New Guidelines for Financial Promotions
Further tightening its regulatory grip, the FCA issued new guidelines in March this year, targeting financial promotions across social media platforms, including memes, reels, and gaming streams.
The aim is to ensure that information is fair, accurate, and accessible from misleading content, reflecting the FCA's ongoing commitment to a safer and more transparent crypto market environment.
"The FCA has served as the AML watchdog for UK crypto businesses since January 2020, enforcing a strict evaluation process for new registrations."
