FCA to supervise crypto asset regime in ‘dirty money’ crackdown

A crypto asset regime will be established with support from the Financial Conduct Authority to create one of the most “comprehensive global responses” to the use of crypto assets in illicit activity, the government has announced.

Criminals will “have nowhere left to hide their ill-gotten gains” thanks to a crackdown in the fight against “dirty money”, according to the Economic Crime Plan document published today.

Government, law enforcement and businesses have agreed a joint plan to work closer to tackle fraud, money laundering, bribery and corruption.

The move is expected to see improved levels of information sharing, resource pooling and technological innovation.

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The plan includes action on crypto assets to ensure these are not being used for money laundering and other illicit activity.

Action 37 of the 52-point plan details the FCA being established as the supervisor of the future crypto assets anti-money laundering/combating the financing of terrorism regime.

It says: “The government is developing a robust regulatory response to address the risks posed by the use of crypto assets for illicit activity, as identified by the FATF [Financial Action Task Force] and the Crypto Asset Task Force.”

The government plans to bring all relevant crypto asset businesses into AML/CTF regulation in January 2020.

The FCA will be the supervisor of crypto asset firms and will draw on its “considerable experience in this area”.

“In recognising the risks that these types of activities pose, the government is considering expanding the FCA’s supervisory toolkit to ensure it has the appropriate means by which to introduce and maintain a strong AML regime in the UK for relevant crypto assets firms,” the plan states.

Financial services has ‘responsibility’ to fight illicit behaviour

The Economic Crime Plan has been agreed between chancellor Philip Hammond, home secretary Sajid Javid, and heads of law enforcement, major financial institutions and legal, accountancy and property organisations.

Hammond says: “The UK has one of the toughest systems for combating money laundering, but too many people are still falling victim to fraud.

“This crime fuels everything from drug dealing to modern slavery, fundamentally undermining people’s faith in our financial system and impacting economic growth.

“By bringing together leaders from across government, law enforcement and business, we can better tackle the scourge of dirty money, and ensure the UK continues to be one of the safest places in the world to invest and do business.”

UK Finance chairman Bob Wigley adds: “Tackling economic crime in partnership with government and law enforcement is a top priority for the finance and banking sector. This plan provides a vital blueprint for how the public and private sector will work together to crack down on the criminals responsible and make this country the cleanest and most transparent for financial business in the world.”

The FCA has also been tasked with considering how it can have the “greatest impact” across the range of firms it supervises through greater use of intelligence and data, including through the expanded use of the information collected in its annual data return.

“The FCA will have identified the changes it wants to make by March 2020 so it can commence implementation of changes in the next financial year (by March 2021),” according to the plan.

The Economic Crime Plan was commissioned by the Economic Crime Strategic Board and developed through its main working groups: the Economic Crime Delivery Board and the Private Sector Steering Group.

The plan includes:

  • A boost to law enforcement capability, with £48 million of previously announced funding to continue to build the National Economic Crime Centre and help the National Crime Agency to better utilise data to proactively target fraudsters and those laundering dirty money
  • Reform of the Suspicious Activity Reporting regime, with Barclays, HSBC UK, Lloyds Banking Group, Nationwide, RBS and Santander UK investing £6.5min 2019/20, in addition to the £3.5m committed by the Home Office this year. All parties will work together on longer term funding for developing richer intelligence and improving operational effectiveness in the fight against dirty money.
  • Establishing a new crypto assets regime with the Financial Conduct Authority, going beyond international standards to create one of the most comprehensive global responses to the use of crypto assets in illicit activity
  • Promoting innovation in the private sector and encouraging businesses to take advantage of pioneering technologies to combat economic crime, as well as reduce their compliance costs
  • Implementing the new Asset Recovery Action Plan, setting out a range of measures designed to enhance efforts to claw back the proceeds of crime, including those held abroad.



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Given that the FCA appears to be constitutionally incapable of preventing a small proportion of the adviser community from selling off-piste junk without relevant PII, preventing the principals of failed firms from phoenixing, heading off an endless string of motorway pile-ups (the latest being LC&F) or even (as Neil Liversidge has found) of interpreting its own rules (who the hell writes them?), the government’s faith in it to be of any use AT ALL in tackling crypto currency fraud is at best hopelessly optimistic, even though it’ll be responsible only for “Action 37 of the 52-point plan”.

    As has been written many times before, the FCA’s lamentable track records proves that it couldn’t competently regulate a wine tasting afternoon at a vineyard. It could and probably would write a 500 page compliance manual but nobody within its own ranks would understand how to apply it. Either that, or no two people would have the same understanding of what they should be doing. It’s a joke.

  2. So when the crypto firms who aren’t authorised to give advice do so will the FSCSmake advisory firms and their sensible clients pay as per LC&F or will the FCA regulate before instead of after the event?

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