UK Crypto Businesses Could Cease Operations After Failing to Meet AML Rules
The Financial Conduct Authority (FCA) has announced that a “significantly high number” of crypto firms operating in the UK are failing to meet current anti-money laundering (AML) rules.
The regulator pointed out that up to 50 companies dealing in crypto had withdrawn applications for the Temporary Registrations Regime (TRR) issued last year. The permit allowed crypto service providers to continue trading until the FCA could formally approve or reject their operations.
— Financial Conduct Authority (@TheFCA) June 3, 2021
In their latest statement, the FCA asserted that crypto startups that pull out of the TRR scheme must halt all trading operations immediately. These businesses will remain suspended until they meet the regulator’s criteria and are added to the FCA’s formal register.
Crypto platforms that refused to stop trading could face heavy fines or lawsuits by the FCA. That said, not all of the 50 firms that have withdrawn from the temporary scheme are covered by the FCA’s rules to register, meaning that some may not be forced to cease trading.
The government agency noted that it would focus on whether a crypto company falls short of AML standards before approving its operations, adding:
“While this is not the only element that the FCA will assess concerning an applicant, the FCA will only register firms where it is confident that processes are in place to identify and prevent this activity.”
Cracking Down On Crypto Businesses
The UK financial watchdog has warned on several occasions that cryptocurrencies such as bitcoin are highly speculative and prone to market dumps.
The agency insists that its counter-terrorist financing and AML legislations are meant to protect UK citizens against bad actors who seek to fund terrorists or transfer and disguise funds from illicit activity.
The governor of the Bank of England, Andrew Bailey, echoed the FCA’s stance on crypto, stressing that UK residents who dabble in the asset class should be prepared to lose their money.
According to UK law, crypto isn’t covered by the country’s Financial Services Compensation Scheme that helps investors reclaim lost investments when businesses go bust.
The FCA joins many other financial watchdogs across the globe that are cracking down on crypto, citing its use in money laundering and other criminal activity.
Despite the current hostile stance from regulators, numerous banking institutions have ventured into crypto to cash in on the sizzling demand for the thriving asset class.
FCA Extends its TRR Scheme
ON THURSDAY, the FCA announced that it had extended its temporary registration scheme for crypto service providers to March 31, 2022.
The move will allow more crypto-focused startups in the UK to carry on with operations while the regulator carries on with its robust assessment. However, firms that pull out from the TRR face immediate closure.
At this point, only five service providers in the UK have been admitted to the FCA’s formal list of registered crypto businesses.