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New FCA AML reporting proposals to hit crypto exchanges

New FCA AML reporting proposals to hit crypto exchanges

United Kingdom’s finance sector regulator the Financial Conduct Authority has released new proposals that seek to tighten anti-money laundering regulations. Through the proposals, FCA will directly target crypto exchanges and custodian wallet providers in abid to tighten AML defenses.

One of FCA’s proposal targets entities that the authority regards as high risk for money laundering. The businesses under this category are the ones directly supervised for Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations.

Rising number of crypto investors and awareness

The second proposal directly impacts cryptocurrency exchange since it requires such businesses to submit updated reports.  Such businesses hold client money, as well as those that manage investments.  The proposal might impact many people considering that the number of investors in the crypto space has been on the rise recently. 

A recent study by the FCA revealed that almost 1.9 million people in the UK hold Bitcoin and other cryptocurrencies. Additionally, the research highlighted that awareness of digital currencies has improved by 73% this from 42% last year.

The FCA has also removed home finance mediation activity and making arrangements with a view to transactions in investments from money laundering regulations. 

The new laws targeting money laundering go back to 2016 when the FCA unveiled an annual financial crime reporting obligation for selected businesses.  The reporting enabled the authority to narrow down on possible money laundering risks from the firms.

The current annual financial crime is based on the type of firm in question regardless of the revenue threshold. It is also based on the type of activity in question alongside total annual revenue of £5 million or more. 

Amid the new AML proposals, FCA’s new prudential regime is on the spot for establishing capital requirements that can render firms uncompetitive globally.

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Ben Jordan is an experienced author, trader, markets analyst, signals strategist, and funds-manager with a deep knowledge of market cycles and financial indicators.