Britain’s top financial regulator has identified cryptocurrency firms as being among the "most at risk" of money laundering, according to a report released by the UK Treasury on May 1.
The report, based on data provided by the Financial Conduct Authority (FCA) for the period between 2022 and 2023, highlights cryptocurrency companies as one of four types of businesses deemed "particularly vulnerable" to financial crime, especially money laundering cases.
Cryptocurrency firms are grouped alongside retail banks, wholesale banks, and wealth management firms in the report, which indicates that 52.8 full-time professionals will be dedicated to overseeing anti-money laundering efforts during the specified period, with nearly one-third of them focusing on cryptocurrency companies.
During the timeframe covered by the report, the FCA's financial crime experts conducted a total of 231 reviews of financial firms operating in the UK, in addition to handling 375 cases related to financial crime and sanctions. Furthermore, FCA teams launched 95 cases against UK cryptocurrency firms as part of broader regulatory efforts.
Efforts to introduce clearer legislation for local cryptocurrency companies are underway in the UK, with the Treasury announcing plans on April 16 to propose a comprehensive regulatory framework for crypto-assets and stablecoins by July.
On April 26, the UK's National Crime Agency (NCA) and police were granted expanded powers to "seize, freeze, and destroy" cryptocurrencies used in criminal activities. These new regulations enable law enforcement to seize crypto assets without making arrests beforehand and empower them to ban detrimental crypto-assets from circulation, typically by destroying them.
Under the updated law, UK police can transfer seized illegal cryptocurrencies to wallets under their control, and victims of crime can apply to recover funds from their cryptocurrency accounts, marking a significant step in the country's efforts to combat financial crime.
