FCA Wants Crypto Firms to Submit Financial Crime Reports


The FCA is seeking to oblige more firms, including some working with cryptocurrency, to report how they manage the risks of financial crime.

February 26, 2021 | AtoZ Markets – In a consultation paper published Monday, the UK Financial Conduct Authority (FCA) has mandated cryptocurrency firms to provide annual reporting on the potential risks of financial crime associated with cryptoassets.

UK financial institutions have been required to report suspicious transactions annually since 2016. However, in August, the regulator suggested that cryptocurrency firms provide additional reporting on possible money laundering risks, regardless of their annual revenue.

Previously, only 2,500 of the 22,000 firms controlled by the FCA had to provide such information. Now the number of “reporting” firms will increase to 7000. These will include banks, virtual asset service providers (VASP), custodian services, as well as all companies covered by the European Union’s Markets in Financial Instruments Directive (MiFID). The agency said it intends to more thoroughly analyze the activities of firms that may carry risks of money laundering through cryptocurrencies.

To prevent financial crimes, the regulator intends to tighten requirements for VASP. At the same time, the department is ready to discuss with interested parties possible approaches to the regulation of cryptocurrencies. The FCA began to oversee the work of British cryptocurrency firms from January 2020. The regulator is indeed stepping up oversight of the digital asset industry in the UK. So, last year, the Office demanded that all firms working with cryptocurrencies in this country undergo compulsory registration. However, in December 2020, the regulator extended the deadline for registering cryptocurrency firms.

Recall that at the beginning of this year, the FCA ban on the sale of cryptocurrency derivatives to retail investors came into force. Many in the industry fear the ban will force users to switch to unregulated platforms.

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