The UK’s financial regulator allocated nearly a third (30%) of its financial crime specialists to oversee crypto asset businesses in 2023, as per a report released on May 1.
The Financial Conduct Authority (FCA) conducted risk assessments across several sectors and identified retail banking, wholesale banking, wealth management, and crypto-asset firms as particularly vulnerable to financial crime in 2023. These sectors were flagged as having a high risk of being exploited for money laundering activities.
In its efforts against financial crime, the FCA’s team of specialists carried out numerous reviews, including 231 in-depth analyses (desk-based reviews) and seven on-site visits. Additionally, other supervisory teams within the FCA identified 375 potential cases, with 95 specifically linked to crypto assets.
Moreover, the regulator extended a key survey – REP CRIM – to crypto businesses in April 2022. This comprehensive survey collects information on anti-money laundering (AML) controls implemented by these firms.
The data obtained through REP-CRIM, along with other intelligence reports, enables the regulator to identify risks more effectively and tailor their supervisory actions accordingly.
UK Crypto Firms Encounter Challenges as FCA Registration Process Filters Out Many
Since January 2020, the FCA has served as the AML watchdog for UK crypto businesses such as exchanges and custodians. It instituted a rigorous evaluation process for new registrations, uncovering significant shortcomings in firms’ anti-money laundering controls. Consequently, many applications were withdrawn, rejected, or declined by the FCA.
The FCA’s March business plan underscores its dedication to consumer protection and ensuring a fair crypto market. This encompasses a focus on bolstering its ability to detect and address crypto market abuse in the coming year. Additionally, the FCA aims to foster a competitive UK financial sector on the global stage.
FCA Takes Action Against Misleading Ads
As part of its heightened oversight of financial promotions, the watchdog removed a greater number of misleading advertisements last year compared to 2022.
This increased vigilance follows the enforcement of stricter advertising rules for high-risk investments in July 2023, including specific guidelines for companies to disclose crucial information about crypto products across various online platforms.
Further strengthening its grip, the FCA issued new guidelines in March this year, targeting financial promotions on social media platforms. This encompasses formats such as memes, reels, and gaming streams, with a focus on ensuring the dissemination of fair and accurate information, leaving no space for misleading content.
