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Crypto Under Threat – UK Banks are Blocking Payments

Richard Marley
June 01, 2021
3 minutes read
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Due to rising financial crimes related to cryptos, banks in the UK are blocking payments to cryptocurrency exchanges. According to the Telegraph, Barclays, Starling, and Monzo have blocked payments to Binance and SwissBorg with the primary motivation being surging cryptocurrency fraud.

Starling, the Goldman Sachs-backed online bank, has enforced the greatest amount of limitations by halting all payments to crypto exchanges. According to the bank, this step had become a necessity given the “high levels of suspected financial crime with such payment.”

On the other hand, banking giant Barclays continues to assert that their customers are not suspended from making payments to cryptocurrency exchanges.

Unsatisfied Customers

While Barclays states that users are not blocked from making payments, customers say otherwise. One of the bank’s customers tweeted that they were locked out of the account after attempting to transfer funds to Binance. They said: “It took two 90-minute phone calls to be able to get the transfer done.”

Now the banks do not want us swapping fiat for crypto. They’re doing all they can to prevent us making more returns on our investments. I only want to buy more #Cardano @IOHK_Charles 👀 pic.twitter.com/3AXJvPAFnw

— Crypto₳d₳ (@CryptoCardano_) May 22, 2021

UK Going Hard on Crypto

Crypto enthusiasts claim that the UK is building upon the “crypto & crime” cliché to attack the success of this industry and rationalize stringent regulations.

The Financial Conduct Authority (FCA) previously warned cryptocurrency traders to be prepared for losing all their funds due to the high volatility of this industry. Being the main supervisor of anti-money laundering and counter-terrorist financing (AML/CTF) in the UK, the FCA also requires all UK-based crypto exchanges to stay compliant with money laundering regulations.

In recent news, the Advertising Standards Authority (ASA) increased ad restrictions on cryptocurrency exchanges, blocking Bitcoin-promoting advertisements by the crypto firm Luno. This is not the first time that the ASA has tried to regulate cryptocurrency advertisements. Back in 2020, the regulator introduced guidelines for the promotion of crypto-related ads. Under these guidelines, crypto exchanges were required to clearly state that the space is speculative in nature and contains a risk of losing money.

Intensified regulations and blocked payments due to surging crypto-related fraud are currently posing as a disincentive for new investors. Because of this, the future of crypto space in the UK might be in jeopardy.

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UK's Financial Watchdog Goes Real-time to Catch Online Criminals
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UK Going Hard on Crypto
The FCA is sweeping the internet on a day-to-day basis to pull out cybercriminals, as the number of warnings sent out continues to increase.

Britain’s financial regulator is forced to weed out scammers of the internet in real-time on a daily basis due to ever-increasing online fraud. An official of the FCA (Financial Conduct Authority) stated that fraudsters are often based outside the country, making this step necessary.

The FCA’s director for enforcement, Mark Steward, stated that the warning has become the basis of the fight against increasing financial scams, particularly since the onset of the pandemic as the lockdown shifted more people online.

In the previous year, the FCA issued 1200 warnings related to social media scams made by fake companies as such companies are unregulated by Britain’s watchdog. The number of warnings made was twice the size of the warnings made in 2019, Steward told parliament’s Treasury Select Committee

He further announced:

“We are now issuing warnings straight away, we are conducting sweeps several times a day of the internet and issuing warnings within 24 hours, so they are up-to-date,”

With rapid warnings, not only can the number of victims be reduced, but banks can also take notice of which individual is present on the warning list to stay cautious, stated Steward. This means that lenders can verify customer identities that may be involved in fraudulent activities prior to taking payments on behalf of such criminals.

He also commented that while online financial scams are not as widespread as traditional banking fraud, they are nonetheless on the rise and being used by criminals to steal sensitive customer data.

According to UK’s Action Fraud, victims of investment scams lost as much as 83 million pounds (USD 89 million) last year. This amount makes almost a 10th of the total 784 million lost to financial scams in the previous year.

Google is also being paid by the FCA to publish the warning online. Steward stated that Google had offered it a “credit” on future warnings.

“The irony of us having to pay social media to publish warnings about advertising they are receiving money from is not lost on us,” Steward said.

Suggested Read: Rising Social Media Scams in 2020 Calling for Digital Identity Verification

Britain has proposed an “online harms” law, but it does not require social media companies to check on the validity of firms advertising financial products.

However, the FCA wishes to make such checks obligatory under the law.

Lawmaker Anthony Browne insisted not to be overawed by the deep pockets of social media companies, claiming that Google itself might be guilty of fraud through advertising scams.

Steward also asserted that the ball is in the court of social media companies, making it their responsibility now to tackle increasing online financial scams.

Read Also: Looking for Online Fraud Prevention? Here Is What You Can Do

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eIDAS and eIDs - The Shift in Identity Verification in the EU & Beyond
Unsatisfied Customers
UK Going Hard on Crypto
In the digital world, ensuring the security of international transactions is the ultimate goal of all companies. The European Union’s eIDAS or Electronic Identification and Trust Services legislation monitors identity verification, authentication and electronic transactions in the region. This legislation allows secure cross-border transactions and removes all digital barriers. Moreover, creating a predictable regulatory environment for a secure and swift electronic transaction system is a lot easier with eIDAS.

Let’s take a look at how identity verification has shifted in the EU.

What is an eID?

In the high-speed digital space we live in, the conventional government-issued ID documents like passports and ID cards are no longer effective. So, electronic or chip-based ID documents are now in use in many countries. The chip in this document contains all data about the individual allowing seamless ID authentication and verification in organisations.
Impact of the eIDAS Regulations

The regulations from the eIDAS:

Ensure that everyone can use their electronic IDs to access public services available in any EU region

Create an international market for trust services like e-signatures, e-seals, time stamps, etc. by ensuring that they will work across borders along with the same legal status as the paper-based ones

EIDAS Regulations for the United Kingdom

The electronic identification and trust services for e-transactions in the internal market are regulated by the eIDAS regulation 910/2014. However, the UK adopted eIDAS regulation and altered the regulations post-Brexit. Additionally, the Electronic Identification and Trust Services for Electronic Transactions Regulation 2016 was also changed. Now, these guidelines are referred to as the UK eIDAS laws.

Companies offering trust services in the EU have to comply with eIDAS laws of the European Union. This also includes operations under the supervision of a regulatory body from a different EU state.

Amalgamation of eIDAS and AMLD – Digital Single Market

The EU created a ‘Digital Single Market’ by incorporating Anti-Money Laundering (AMLD) with the eIDAS regulations. The digital single market brings uniformity in customer onboarding. Organisations across the European Union can remotely verify customers making customer onboarding frictionless.

The eIDAS regulation article 920/2014 provides AMLD with the control to verify and onboard clients in a safe, simple and remote way by removing all barriers in the customer acquisition process.

Suggested: | 6AMLD of EU – A detailed insight

The Legislative Framework for ID Verification by eIDAS

As per the eIDAS regulations, standards for digital identification are:

Create a credible ecosystem with maximum technical sureties to secure individuals and companies

Article 24 of the legislation avoids the personalisation act before getting a certificate in the Registration Entity and allows identity verification through video calls (generally called the video KYC process)

Consequently, it allows new licenses in eIDAS laws that lead to new digital identity verification mechanisms without harming the security of the processes

The eIDAS laws introduced digital identity verification methods for the first time in history. This reduces the physical interaction between companies and customers

The financial and telecommunication sectors are now capable of acquiring customers digitally anytime. The framework established by the eIDAS is entirely new for organisations and end-users

Apart from all these, eIDAS and AMLD5 together have reduced costs and saved time along with a great user experience during the customer onboarding process

Interoperability of eIDs as per eIDAS

Given the differences in eIDs across countries, the main goal of the eIDAS is to remove all sorts of barriers for identification. For instance, an individual with an Italian eID residing in Estonia should not be bound to use the Estonian eID. To ensure interoperability of the eIDs, the eIDAS is working on an IT infrastructure called eIDAS nodes.

Shufti Pro’s IDV Suite – Answer to the Shifting ID Verification Trends

Electronic or eIDs have changed the identity verification game. Now, customers believe in the digital process rather than physically visiting the company. However, the change in identity verification is not a problem anymore. Shufti Pro offers multiple alternatives for one problem. Although all our ID verification services are remote, there are two options that can help every firm irrespective of their industry. Let’s take a look at both of these:

1. NFC-based ID Verification

The chip in eIDs allows businesses to verify the identities of end-users in the blink of an eye. NFC-based identity verification validates identities through a tap on an NFC-enabled device.

Here’s how the process goes:

2. Video Interview KYC

Video KYC is another remote identity verification solution that we offer. During the video KYC process, the end-user gets in touch with the KYC expert on a live video call for authentication. The process has seven simple steps:

End-user registers on the company’s platform for KYC

KYC expert and the end-user get in touch on a live video call

The expert interviews customers for liveness detection

End-user shows the government-issued ID documents during the call

The document is verified for forgery and tampering

The face of the end-user is matched against the image on the ID document

Verification results are delivered and stored in the back-office

Note that the process is lengthy but takes only a minute or two to complete.

In a Nutshell…

Electronic or biometric identities are now a more convenient option for identification. The eIDAS issued guidelines on remote identity verification and seamless cross-border transactions in the European Union. The interoperability of eIDs across member states is still under consideration. However, eIDAS is working on an IT infrastructure to remove hurdles for cross-border use of eIDs. The laws also state multiple methods for remote identity verification and fortunately, all of Shufti Pro’s identity verification solutions validate IDs remotely. The two most appropriate services for the EU member state and the UK are Video Interview KYC and NFC Verification.

For more information, get in touch with our experts.

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Crypto Under Threat – UK Banks are Blocking Payments

Unsatisfied Customers

UK Going Hard on Crypto

Impact of the eIDAS Regulations

EIDAS Regulations for the United Kingdom

Amalgamation of eIDAS and AMLD – Digital Single Market

The Legislative Framework for ID Verification by eIDAS

Interoperability of eIDs as per eIDAS

Shufti Pro’s IDV Suite – Answer to the Shifting ID Verification Trends

1. NFC-based ID Verification

2. Video Interview KYC

In a Nutshell…

Let’s prove your

customer’s identity

with Shuftipro.

Let’s prove your customer’s

identity with Shuftipro.

Crypto Under Threat – UK Banks are Blocking Payments

Unsatisfied Customers

UK Going Hard on Crypto

What is an eID?

Impact of the eIDAS Regulations

EIDAS Regulations for the United Kingdom

Amalgamation of eIDAS and AMLD – Digital Single Market

The Legislative Framework for ID Verification by eIDAS

Interoperability of eIDs as per eIDAS

Shufti Pro’s IDV Suite – Answer to the Shifting ID Verification Trends

1. NFC-based ID Verification

2. Video Interview KYC

In a Nutshell…

Let’s prove your

customer’s identity

with Shuftipro.

Let’s prove your customer’s

identity with Shuftipro.