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UK: Financial regulator expands AML regulations to all cryptocurrency firms

According to the consultation paper published by the UK’s financial regulator, cryptocurrency firms need to submit an annual report on their problem dealing method.

The consultation paper reveals the plan to broaden the annual crime reporting requirements that involvescryptocurrency exchanges and other custodian wallet service providers.

By broadening the reporting regulations to a massive number of companies, the authorities will be able to spot the firms that pose fundamental money laundering threats because of their operating system.

With these precautionary measures, the Financial Conduct Authority wants to stay updated with the latest trends in the finance sector and aims to become “data-led. Nevertheless, it will also reduce the risks of cryptocurrency firms being used for money laundering activities by the culprits.

Moreover, the financial regulators have been trying to ensure the integrity of the financial sector by mitigating the money laundering risks. The FCA had plans to implement data analytics to alleviate the regulatory approach and overcome the issues enterprises face.

What’s in it for the FCA?

The consultation paper claims that FCA should gather as much data as they can because it will provide a risk-based approach to the financial crime sector. The consultation paper sheds light on many new aspects including how the annual reporting expansion will benefit the country. Primarily, the expansion will result in the FCA acquiring additional data of 4,500 companies per year.

READ MORE: Will "Block-chain"​ technology be effective in combating terror financing?

For those concerned about whether these reporting obligations have anything to do with the total revenue of the company. Annual reporting requirements apply irrespective of the company’s yearly revenue. In the annual report, businesses will have to outline their strategies in dealing with potential threats and suspicious activity applications filed to the National Crime Agency (NCA).

Precisely, most of the consultation paper is a review of legislation and regulatory rules of the United Kingdom. It narrates the European Union’s 5th Money Laundering directive which came in function in the earlier part of 2020. Now its provisions extend the Anti-Money Laundering regulations to explicit cryptocurrency firms.

At last, the U.K. amended the AML precautions on the recommendation of the Financial Action Task Force, these measures include the monitoring of Initial Coin Offering.

by Ben Gabriel, August 30, 2020, published on invezz

Image by PublicDomainPictures from Pixabay


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