UK Regulator: Crypto Firms Fail to Meet Anti-Money Laundering Rules

A ‘significantly high number’ of cryptocurrency firms have failed to comply with the U.K.’s trading standards and are struggling to meet anti-money laundering rules, Britain’s financial regulator said last week. 

The registration deadline for the temporary regime has been extended from July 9, 2021 to March 31, 2022 for existing crypto firms. (Source: Pixabay.com)The registration deadline for the temporary regime has been extended from July 9, 2021 to March 31, 2022 for existing crypto firms. (Photo: Miloslav Hamřík, License, License)Since January 2020, crypto firms operating in the U.K. are required to register with the Financial Conduct Authority (FCA) and comply with local money laundering, terrorist financing and transfer of funds regulations. 

Additionally, last December the agency granted a temporary registration for existing firms that will allow crypto businesses to continue operating while their applications are still under assessment.

The FCA has said many businesses have failed to meet the regulations, which resulted in an unprecedented number of firms withdrawing their applications to trade under the regulator's surveillance.

Only five firms have successfully registered with the FCA. Nearly 90 others received a temporary registration to carry out their activities while they await a decision. “Appearing on this list does not mean that the FCA has assessed them as fit and proper,” the regulator said. 

The registration deadline for the temporary regime has been extended from July 9, 2021 to March 31, 2022 for existing crypto firms. 

“The FCA will only register firms where it is confident that processes are in place to identify and prevent this activity,” the agency said in a statement, referring to money laundering and terrorist financing. 

Those that don’t meet the requirements can no longer trade digital currencies and could face fines or legal actions if they refuse to shut down.

The FCA’s registry follows growing concerns surrounding cryptocurrency since its first appearance more than a decade ago. The digital market is known for lacking regulation and surveillance and is often exploited by organized crime. 

Last January, the British regulator warned of risks related to speculative investments involving cryptoassets and said that consumers who invest in these types of products ‘should be prepared to lose all their money’.  

Similarly, European Central Bank President Christine Lagarde called earlier this year for the adoption of a global regulation concerning Bitcoin in order to prevent money laundering and other illegal practices.

“(Bitcoin) is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity,” she said. 

“There has to be regulation. This has to be applied and agreed upon,” Lagarde said.