UK Regulators Obligates Crypto Firms to Submit Financial Crime Report

Edward lilly April 2, 2021 3 minute read

The UK’s financial watchdog, Financial Conduct Authority (FCA) has expanded financial regulations to cover the cryptocurrency industry. The crypto firms will now be obligated to submit a financial crime report with FCA.

FCA recently announced that the cryptocurrency wallet operators and the cryptocurrency exchanges will now be submitting an annual report known as REP-CRIM that.

“We consider it appropriate to include crypto assets businesses irrespective of their total annual revenue because they pose a higher inherent money laundering and terrorist financing risk,” said the FCA.

The REP-CRIP was first introduced by the regulators in 2016 and in 2020 FCA Authority scaled up the number of companies that were asked to submit the financial crime report. Now the final policy has been published by the FCA that covers the cryptocurrency businesses as well.

According to the regulation, around 7,000 firms are obligated to provide regulators with a full report of REP-CRIM. Previously, only 2,500 firms were obligated to comply with these regulations. Other than the crypto businesses, banks and society builders are also regulated under this REP-CRIM framework.

“These changes will give us firm-specific information about financial crime from a wider set of firms, across an increased variety of sectors and firm sizes,” said the FCA. “This additional information will allow our supervisory approach to be more data-led, and broaden our understanding of firms that may have inherent money laundering risks due to their activities.”

During the industry consultation period, the initial date announced to implement the extension of the REP-CRIM policy was 10th January 2022. Now the date has been changed to the 30th March 2022 because of the “Temporary Registration Regime”. This regime was announced in December 2020 and it allows the already existing businesses to work till 9th July 2021. This means the FCA’s determination of their application has been temporarily halted. FCA wanted to provide some time to the crypto business after they are registered to comply with the new REP-CRIM rules.

The UK’s financial watchdog is all set to tighten its regulations for the crypto industry. It is working to ensure that the industry is compliant with the AMLD5 regulations. However, up until now, the regulators have only registered four companies and fifty firms are waiting to get registered. Crypto UK has called upon the chancellor Rishi Sunak to interfere.