UK Regulator Plans to Make Money Laundering Data Sharing Mandatory for Firms

In a new proposal, the FCA has laid out plans that will mandate the sharing of money laundering data for UK cryptocurrency firms and exchanges.

British regulators take stringent steps

The UK Financial Conduct Authority (FCA) wants digital currency companies operating in the UK to provide more information about the risks of money laundering. The regulator has also put its new proposal forward for comment. It will affect crypto wallet custodians as well as cryptocurrency exchanges the most. These entities will have to produce reports related to potential money laundering instances.

The policy proposal suggests that the FCA plans to extend the obligations it imposes related to risks of money laundering. It started the annual crime reports of financial institutions in 2016. The new proposal states that all “cryptoasset exchange providers and custodian wallet providers” have to provide the regulator a report about their financial crime risk “irrespective of their total annual revenue.”

It is open for comments till November 23. After the comments, the policy statement and new rules will be published by the first quarter of next year.

What information will be requested?

The information that could be requested as part of the report could include the number of a firm’s customers based in high-risk jurisdictions, the top three most prevalent frauds, and the number of customers who refused or excited for reasons related to financial crimes. The reports must be provided from the accounting reference date occurring after January 10, 2022. Note that cryptocurrency companies have been given time till January 10, 2021, to register with the regulator.

Several crypto companies are based in tax havens around the world like Cayman Island but their operations are spread all over the world. The regulator said that it may impose further reporting obligations on the crypto businesses in the future. The FCA aims to harvest data from these companies to ensure that it can target its resources at firms that could carry on potentially higher risks of money laundering.