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 cryptoasset 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 FCA is now the UK's AML/CFT supervisor for businesses carrying out certain cryptoasset activities.
What does this mean?
The development comes under the amended Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs) and, among other things, cryptoasset 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;
- apply more intrusive due diligence, known as enhanced 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 cryptoassets must also register with the FCA, as follows:
- New businesses carrying out cryptoasset activity in scope of the MLRs must be registered with the FCA before conducting businesses – registration forms are available on Connect.
- Businesses already conducting cryptoasset activity before 10 January 2020 may continue their business but will need to comply with the MLRs immediately.
- All existing businesses undertaking cryptoasset activities must be registered by January 2021. These businesses must submit a completed application for registration via Connect by June 2020.
- Existing Financial Services and Markets Act firms, e-money institutions or payment services businesses undertaking cryptoasset activity will also be required to apply for registration.
The FCA said that more information could be found on its dedicated cryptoasset AML/CFT webpage.
"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," the FCA said in its press release.
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