UK Cryptocurrency Firms Face Tougher Regulations Under the Brexit Regime
February 6, 2020 | Cryptocurrencies | No Comments
After Great Britain’s Brexit, or withdrawal from the European Union, became official last January 31, 2020, the country’s Financial Conduct Authority (FCA) came out with a formal announcement of its sole authority to monitor and regulate cryptocurrency-related activities.
According to the FCA announcement published last January 10, 2020, the focus of supervision will be the UK-registered businesses engaged in cryptocurrency operations and their compliance with Anti-Money Laundering (AML) and Counter Terrorist Financing (CTF) regulations and requirements.
Even prior to Brexit, the FCA had issued a warning in July 2019 to UK-based cryptocurrency firms. As a regulatory body, it deems cryptocurrencies as “ill-suited” to offer as investment products to small investors. The FCA believes that cryptocurrencies offered as exchange-traded notes and derivatives, pose a great risk to consumers due to the widespread misinformation about them as a financial product.
The Financial Conduct Authority is the regulator for all financial services companies and financial markets in Great Britain. On the other hand, banks, credit unions, insurers, major investment firms and building societies, are under the regulatory supervision of the Prudential Regulation Authority (PRA), to which the primary goal of regulations is to promote the safety and soundness of those types of firms.
FCA’s List of Requirements for Cryptocurrency Businesses Based in the UK
Along with the announcement of its authority to regulate UK firms engaged in cryptocurrency operations, the FCA also provided a list of requirements with which such businesse must comply.
1. Conduct risk identification and assessment pertaining to AML and CFT
2. Development of policies and controls aimed at eliminating identified risks related to AML and CFT.
3. Apply customer due diligence by identifying and verifying customers by obtaining customer name and photograph based on an official document confirming a person’s identity, date of birth and residential address.
The FCA also stated
“We intend to proactively supervise compliance with the new regulations, and will take quick action when and where firms fall short of desired standards in ways that cause risks to the integrity of the UK market”