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FCA to supervise AML/CTF compliance of UK cryptoasset businesses

Mon, 13 Jan 2020, 04:40 am UTC

The UK Financial Conduct Authority (FCA) has become the anti-money laundering and counter-terrorist financing (AML/CTF) supervisor for businesses conducting certain cryptoasset activities.

The FCA has taken over this new role under the amended Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs).

Cryptoasset businesses that must comply with the MLRs from 10 January 2020 include custodian wallet providers and cryptoasset exchange provider, which includes cryptoasset Automated Teller Machine (ATM), peer to peer providers, issuing new cryptoassets.

“We will proactively supervise firms’ compliance with the new regulations, and will take swift action where firms fall short of desired standards and cause risks to market integrity,” the regulator said.

Among other things, such businesses would be now required to identify and assess the ML/TF risks which their business is subject to and have proper policies, systems and controls to mitigate these risks, undertake customer due diligence or enhanced due diligence as appropriate, and undertake ongoing monitoring of all customers to ensure that transactions are consistent with the business’s knowledge of the customer and the customer’s business and risk profile.

Also, depending upon the size and nature of the business, cryptoasset businesses would be required to appoint an individual – a member of the board or senior management – to be responsible for compliance with the MLRs.

New businesses carrying out cryptoasset activity in the scope of the MLRs must register with the FCA before conducting businesses, while existing businesses will need to ensure their compliance with the MLRs with immediate effect. Existing Financial Services and Markets Act firms, e-money institutions or payment services businesses undertaking cryptoasset activity will also be required to register with the FCA.

“All existing businesses undertaking cryptoasset activities must be registered by January 2021. To ensure this deadline is met, these businesses must submit a completed application for registration via Connect by June 2020,” the FCA said.

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