May 7, 2024
UK Govt, Crypto Firms Pose Top Money Laundering Risk
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UK Govt: Crypto Firms Pose Top Money Laundering Risk

The United Kingdom’s top financial regulator highlighted crypto firms among those with the “greatest risk” of being exploited for money laundering. According to a report from the U.K. Treasury on May 1, data provided by the Financial Conduct Authority (FCA) revealed that crypto-asset companies ranked among the top four types of firms “particularly vulnerable” to financial crime between 2022 and 2023. These firms were listed alongside retail banking, wholesale banking, and wealth management companies.

Crypto-asset firms remain vulnerable to being exploited for money laundering. Source: FCA

Regulatory Oversight and Supervision

During the 2022 to 2023 period, the report indicated that there were 52.8 full-time specialist employees dedicated to overseeing Anti-Money Laundering cases, with nearly one-third specifically focused on supervising crypto firms. Additionally, the FCA’s financial crime specialists conducted a total of 231 reviews of financial firms operating in the U.K., along with 375 cases related to financial crimes and sanctions.

As part of its supervisory efforts, the FCA launched 95 cases into British crypto companies, demonstrating heightened scrutiny and regulatory oversight in the crypto sector.

Legislative and Enforcement Measures

The U.K. government has been actively working to introduce clearer legislation for local crypto firms. On April 16, the U.K. Treasury announced plans to present a comprehensive regulatory framework for crypto assets and stablecoins by July.

In further efforts to combat crypto-related crimes, the U.K. National Crime Agency (NCA) and police received expanded authority on April 26 to “seize, freeze, and destroy” cryptocurrency used by criminals. Under the new rules, law enforcement agencies in the country no longer need to arrest seizing crypto holdings.

Moreover, the new laws empower U.K. law enforcement to seize items such as passwords and memory sticks that could aid investigations. Additionally, they have the authority to remove crypto assets from circulation, typically by burning the asset, if it is deemed detrimental to the public good.

Under these regulations, U.K. police can transfer seized illicit cryptocurrency to wallets under their control, and victims of crypto-related crimes can apply to reclaim funds from their crypto accounts. These measures underscore the U.K. government’s commitment to strengthening regulatory oversight and enforcement in the crypto space to mitigate money laundering risks and combat financial crime.

Image by on Freepik

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