FCA Obliges Crypto Firms to Share Financial Crime Information

Cryptocurrency exchanges are among a range of financial services firms that have become obliged to share annual financial crime information with the UK's financial watchdog.

According to a policy statement published today, the Financial Conduct Authority (FCA) pressed ahead with its previous plans to bring the so-called ‘cryptoasset businesses’ under additional reporting requirements.

The scope of new reporting obligations covers both trading platforms and custodial wallet providers. And outside the crypto domain, electronic money institutions and multilateral trading facilities are among the other categories of firms that became subject to the new rules set out by the FCA.

The City watchdog outlines that it would not apply revenue thresholds to define the firms required to submit the annual financial crime report. Irrespective of their total annual revenue, the addressed firms are those that 'hold Client Money Client Money Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Read this Term or assets' or carry on an activity that the FCA considers to be a higher Money Laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Read this Term risk.

The annual financial crime reporting obligation (REP-CRIM) aggregates information that assists the UK regulators in monitoring trends in financial crime. Since 2016, it has only been applied to larger firms.

Many Crypto Firms Shuttered UK Operations

“REP-CRIM provides us information on a range of indicators that reflect the potential money laundering risks of firms’ based on their regulated activity and helps us to supervise firms. In our 2020/21 Business Plan, we said we would consider extending the REP-CRIM reporting obligation to more firms,” the regulator said.

Many crypto businesses shuttered their operations in the United Kingdom after the applicability of final rules banning derivatives that allow investors to take a view on the direction of the price of crypto assets. The ban affects CFDs, options and futures, as well as exchange-traded notes (ETNs) that relate to unregulated crypto assets.

The FCA estimates the prohibition would save investors £53 million ($69 million) a year in losses, but it would not force them to liquidate their existing trades. The watchdog considers these products are ‘ill-suited to retail consumers’ who cannot assess the risks of derivatives or ETNs that reference certain crypto-assets.

Citing concern over investor protection, the authorities said that even companies that sell regulated investments with an underlying cryptocurrency element will need FCA authorization to do so, depending on their activities.