The UK’s financial regulator plans on having crypto exchanges and crypto wallet custodians provide more detailed information on their financial reports, arguing this will aid them in countering money laundering
The UK’s Financial Conduct Authority (FCA) has released a document, entitled the Extension of Annual Financial Crime Reporting Obligation, that revealed the regulatory watchdog’s plans to extend financial crime reporting requirements to crypto businesses in the UK.
This move is the latest compliance mandate that will be implemented on cryptocurrency activities in the country.
Under these new regulations, crypto exchanges and wallet providers will be required to submit comprehensive financial reports, regardless of their annual revenues. This new law is expected to be enforced from January 2022 onwards.
“We propose to extend the scope of firms required to provide us with REP-CRIM information to include firms that carry on regulated activities that we consider potentially pose higher money laundering risk. This extension will be irrespective of a firm’s revenue threshold,” the paper reads.
The FCA is open to commentary and submissions regarding the proposals in the document, and has advised the public to send in their comments for consideration before November 23, 2020. The policy statement, which will include any final rules, is expected to be released by the first quarter of 2021.
The regulator explained that this planned extension is a part of its efforts to update anti-money laundering oversight activities. The regulator argued in the document that these measures will be important in ensuring that the agency’s regulatory protocols are driven by data.
“We consider that this approach will result in improving firms’ money laundering systems and controls, reduce actual risks of money laundering, and help improve the overall integrity of the UK financial system. It is also in line and builds on our data strategy, announced earlier this year, to use data and data analytics to transform the way we regulate and reduce the burden on firms.”
This new obligation for crypto businesses to report financial crimes is also in line with the European Union’s fifth anti-money laundering directive (AMLD-5).
The FCA also hinted that additional reporting obligations may be expected of crypto businesses in the future. This year marks a significant increase in the UK regulator’s monitoring of the country’s emerging cryptocurrency industry.
Prior to this new mandate, the FDA has also established that all crypto startups in the country need to apply for operating licenses from the agency, issuing warnings about crypto exchanges that continue to do business in the country without having procured the necessary approvals.