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The cryptocurrency industry faces renewed regulatory scrutiny, with a UK Treasury report identifying crypto firms as “greatest risks” for money laundering.
Covering 2022-2023, the report flags vulnerabilities across financial sectors, including crypto-asset companies, wealth management, and banking.
Crypto Firms In The Spotlight
The FCA’s data shows that crypto-asset firms are among the top four most vulnerable to financial crimes, particularly money laundering.
This concerning revelation has prompted the UK government to take decisive action to bolster regulatory oversight and enforcement capabilities in the crypto space.
During the 2022 to 2023 period, the FCA’s financial crime specialists conducted a total of 231 reviews of financial firms operating in the UK, as well as an additional 375 cases related to financial crimes and sanctions.
Notably, between 2022 and 2023, there were 52.8 full-time specialist employees overseeing Anti-Money Laundering cases, with nearly one-third focused specifically on supervising crypto firms.
Strengthening Regulatory Oversight
In response to the identified risks, the UK has been working to introduce clearer legislation and a comprehensive regulatory framework for local crypto firms.
On April 16, the UK Treasury announced its intention to present a full regulatory framework for crypto assets and stablecoins by July.
Furthermore, as part of a broader supervisory effort outside of the full-time reviews, FCA teams launched a total of 95 cases into British crypto companies.
These actions underscore the UK government’s commitment to addressing the potential vulnerabilities within the crypto industry and safeguarding the financial system from illicit activities.
Empowering Law Enforcement Against Crypto Crime
In addition to regulatory measures, the UK has also bolstered its law enforcement capabilities in combating financial crime involving cryptocurrencies.
On April 26, the UK National Crime Agency (NCA) and police received expanded authority to “seize, freeze, and destroy” cryptocurrency used by criminals.
Under the new rules, police in the country will no longer be required to make an arrest before seizing crypto holdings.
They have also been granted the power to remove crypto assets from being returned into circulation — typically by burning the asset — if it were to be deemed detrimental to the public good.
Moreover, UK law enforcement can now seize items like passwords and memory sticks that could aid investigations. They have also been granted the power to transfer seized illicit cryptocurrency to wallets under their control, and crime victims can apply to reclaim funds from their crypto accounts.
Conclusion
The UK government’s recent report and subsequent actions highlight the growing concern surrounding the potential misuse of cryptocurrencies for financial crime, particularly money laundering.
By identifying crypto firms as among the “greatest risks” and implementing robust regulatory and enforcement measures, the UK aims to tackle these vulnerabilities head-on.
While these steps may pose challenges for legitimate crypto businesses, they underscore the importance of promoting transparency, accountability, and consumer protection within the rapidly evolving crypto industry.
Adarsh Singh is a true connoisseur of Defi and Blockchain technologies, who left his job at a “Big 4” multinational finance firm to pursue crypto and NFT trading full-time. He has a strong background in finance, with MBA from a prestigious B-school. He delves deep into these innovative fields, unraveling their intricacies. Uncovering hidden gems, be it coins, tokens or NFTs, is his expertise. NFTs drive deep interest for him, and his creative analysis of NFTs opens up engaging narratives. He strives to bring decentralized digital assets accessible to the masses.
