The lead financial regulator in the United Kingdom, the Financial Conduct Authority, announced that it will require submission of reports on possible money laundering acts from all financial and asset firms, including cryptocurrency firms.
Any suspicious activity related to money laundering will now be shared with the FCA, as an extension to a law passed last 2016, regulating financial industries and their obligation to disclose related activity on their clients’ accounts.
FCA released a document on Monday, citing the widening of the scope of the regulatory policies that apply only to selected financial firms, and include all business establishments regardless of their generated revenue. Cryptocurrency firms now fall under that category. Accounts derived from “high risk” categories that have been previously associated with money laundering and tax evasion crimes will be flagged.
“Cryptoasset exchange providers and custodian wallet providers must provide the FCA with a report about their financial crime risk irrespective of their total annual revenue,” according to a statement in the document.
The report that business are obliged to submit annually is called a REP-CRIM (Financial Crime Report). It was intended to help the authorities track financial crimes, resolve them early and prevent even bigger crimes to be committed.
A directive that took effect last month which is the Fifth Money Laundering Directive passed into law a regulation that obliges cryptoasset businesses to coordinate with authorities to prevent and stop any form of financial fraud. FCA’s proposal is still on hold while comments are being collected until the 23rd of November when an official statement is set to be published.
The cut-off date for Crypto companies to register is on January 10, 2021. After that, they are legally bound by law to abide by the policies stated on the directive and its extension. Why the concern? The UK has come to the knowledge that several crypto businesses, such as digital wallets and trading platforms are registered in areas with low-burden taxes like the Cayman Islands, but are operational around the world.
But the FCA has a different definition for “operational.” Its legal definition is that a business is only considered as operational if it has a physical base on the country that it reaches, and if they have acquired permission from the governing bodies.
It will be a turning point for the essence of cryptocurrency assets as a decentralized and exclusive account with yet unknown implications.