Cryptocurrency Money Laundering Risks Highlighted by UK Treasury

The latest report from the UK Financial Conduct Authority (FCA) highlights growing concerns surrounding money laundering risks within the cryptocurrency, banking, and asset management sectors.

According to the document titled “Anti-money laundering and counter-terrorist financing,” the FCA intensified its scrutiny between 2022 and 2023, employing over 50 financial crime specialists who evaluated 238 firms. Notably, a third of these assessments focused on crypto correction businesses. The report underscores the FCA’s rigorous approach, which identified significant control weaknesses among these entities, leading to many withdrawing applications or facing rejection.

“As part of the FCA’s risk-based approach, it applied a robust assessment process at the registration gateway for these businesses, and identified significant weaknesses in firms’ controls, resulting in a large number of firms withdrawing their applications or being rejected or refused by the FCA,” noted the UK Treasury report.

Enforcement Actions and Non-Compliance

External watchdog groups, in addition to the FCA, opened 375 cases related to financial crime, with 95 investigations specifically targeting cryptocurrencies. In October 2023, the FCA publicly addressed non-compliance issues within crypto firms regarding new marketing regulations. The regulator issued 221 non-compliance warnings, pinpointing three common shortcomings. It signaled its intent to take decisive action against firms failing to adhere to regulatory standards.

This announcement followed the enforcement of stricter marketing rules for crypto firms in the UK, mandating clarity, fairness, and accuracy in their advertising practices.