FCA

UK FCA crypto skills gap is causing slow enforcement, says National Audit Office

The National Audit Office emphasized that it took nearly three years for the U.K. Financial Conduct Authority to address illicit activity in crypto ATMs nationwide.

The National Audit Office (NAO) in the United Kingdom has raised concerns about the effectiveness of the Financial Conduct Authority (FCA) in regulating the cryptocurrency industry.

In a recent report titled “Financial services regulation: adapting to change,” the NAO has claimed that the FCA is being slow to respond and take action against illicit activities in the crypto industry.

The NAO claims that the delay in registering crypto firms seeking regulatory approval from the FCA was attributed to the absence of specialized crypto personnel.

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UK FCA crypto skills gap is causing slow enforcement

The National Audit Office said it took nearly three years for the U.K. Financial Conduct Authority to address illicit activity in crypto ATMs nationwide.

The U.K’s National Audit Office (NAO) has raised concerns about the effectiveness of the Financial Conduct Authority (FCA) in regulating the cryptocurrency industry.

In a recent report titled “Financial services regulation: adapting to change,” the NAO claimed that the FCA is slow to respond and take action against illicit activities in the crypto industry.

The NAO claims that the delay in registering crypto firms seeking regulatory approval from the FCA was attributed to the absence of specialized crypto personnel.

Read more

Crypto firms could face 2 years jail for breaching UK advertising laws

Crypto firms in the United Kingdom could face some harsh punishments under the FCA’s proposed financial promotions regime.

Newly proposed advertising rules in the United Kingdom could potentially see executives of crypto firms face up to two years of prison for failing to meet certain requirements around promotion, according to the United Kingdom’s financial watchdog. 

In a Feb. 6 statement, the U.K. Financial Conduct Authority revealed that if the proposed “financial promotions regime” is approved by Parliament, all crypto firms in the country and overseas would have to follow certain requirements when advertising their crypto services to U.K. customers.

“Cryptoasset businesses marketing to UK consumers, including firms based overseas, must get ready for this regime,” said the FCA.

“Acting now will help ensure they can continue to legally promote to U.K. consumers. We encourage firms to take all necessary advice as part of their preparations,” it added.

Under the FCA’s proposed regime, crypto firms would need to either have authorization from the FCA to advertise their services or have an exemption under the Financial Promotion Order.

According to the regulator, there are only four routes under which a “cryptoasset business” can promote its services to customers in the United Kingdom: 

  1. The promotion is communicated by an FCA-authorised person.
  2. The promotion is made by an unauthorized person but approved by an FCA-authorized person. Legislation is currently making its way through Parliament that, if passed, would introduce a regulatory gateway that authorized firms will need to pass through in order to approve financial promotions for unauthorized persons.
  3. The promotion is communicated by a crypto asset business registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
  4. The promotion otherwise complies with the conditions of an exemption in the Financial Promotion Order.

The regulator said that any promotion made outside of these routes will be in breach of the Financial Services and Markets Act 2000 (FSMA), which carries a criminal punishment of up to two years of imprisonment.

“We will take robust action where we see firms promoting cryptoassets to UK consumers in breach of the requirements of the financial promotions regime,” the FCA said.

Related: British authorities split on banning sale of crypto investment products

Other than potential prison time for its execs, firms caught violating the new regime could face having their website taken down, public warnings and other enforcement actions.

At this stage, the FCA has said they will await the “relevant legislation” to publish “our final rules for crypto asset promotions,” possibly indicating the financial promotions regime could see updates or changes.

“Subject to any changes in circumstances, we expect to take a consistent approach to crypto assets to that taken in our new rules, in place from Feb. 1 2023, for other high-risk investments,” the FCA said.

Crypto scammers abuse ‘lax’ UK company laws to fool victims: Report

A report suggests companies are able to register in the U.K. very easily, making them appear more credible to potential scam victims.

The United Kingdom is host to at least 168 companies accused of running fraudulent crypto or foreign exchange (forex) scams, according to an independent analysis.

A joint investigation by media firms the Bureau of Investigative Journalism and the Observer published Jan. 29 found that organized crime groups are using the U.K. as their base due to its “lax regulation.”

The actual number of U.K.-based crypto or forex companies involved in scams is likely far greater than 168 as the number was calculated by reviewing lists of suspected shell companies and cross-referencing them with reports of fraudulent activity on various websites.

Around half of the companies found were linked to so-called “pig-butchering scams.”

A pig-butchering scams is an insidious scheme where the scammer builds trust with the victim — often incorporating romance — before convincing them to deposit money or crypto onto a trading platform or virtual wallet that the scammer controls.

The scammer then continues to “fatten” the victim and build further trust before persuading them to transfer a much larger sum, only to then make off with the funds.

Victims were often approached on social media or through dating websites such as Tinder, according to the report.

Additionally, many of the victims interviewed in the report said that the companies appeared more legitimate as they were based in the U.K., saying they would not have fallen for the scam had the companies been located elsewhere.

Registering a company in the U.K. costs as little as 12 British pounds ($14.85) and requires no form of identification, making it easy for fraudulent companies to register there and gain “sham credibility.”

Companies are required to provide a U.K. office address to register, however, which has led to some residential addresses being bombarded with letters intended for companies that claim to have an office there.

Letters that a U.K. resident claimed to have received that were intended for shell companies registered at their address. Source: The Observer

“What’s been happening in the U.K. is unconscionable,” financial crime investigator Graham Barrow was quoted as saying. “We have known for 20 years at least that U.K. companies are being used in these scams and that we are probably the world’s biggest provider of scam companies.”

Related: UK-native stablecoin integrates into 18,000 ATMs nationwide

The U.K. government has been trying to crack down on crypto companies in the region, with the U.K. Financial Conduct Authority requiring that all businesses that carry on crypto asset activity register with it as of Jan. 10, 2020.

The regulator has been very stringent with its approvals, however, with many crypto-related businesses continuing to operate as unregistered businesses as it tries to find a balance between providing a safe environment for investors and supporting innovation in the industry.

FCA highlights limited role as unregistered businesses continue to operate

Crypto.com has become the latest company to register with the United Kingdom’s Financial Conduct Authority, while many continue to operate without approval.

The number of unregistered cryptocurrency-related businesses continues to outweigh those signed up with the United Kingdom’s Financial Conduct Authority. Crypto.com became the latest business from the cryptocurrency ecosystem to register with the FCA, joining a list of a confirmed 37 companies with the green light to offer services in the country.

Just seven businesses have gone through the registration process in 2022 to achieve Money Laundering Regulations approval, which includes eToro UK, DRW Global Markets LTD, Zodia Markets (UK) Limited, Uphold Europe Limited, Rubicon Digital UK Limited and Wintermute Trading LTD. Crypto.com is the seventh, registered under FORIS DAX UK Limited.

The FCA has also compiled a list of U.K.-based businesses that continue to carry out ‘crypto asset activity’ without being registered with the FCA for Anti-Money Laundering (AML) purposes. The list is extensive, mainly featuring firms offering a variety of cryptocurrency trading and foreign exchange services.

New cryptocurrency-focused regulations were instituted in January 2020 to allow the FCA to supervise businesses operating in the space and enforce AML and counter-terrorism financing regulations.

Companies were given just over a year to submit applications to be eligible for a temporary registration regime (TRR), while failure to do so and continue operating could be deemed a criminal offense.

Related: Enforcement and adoption: What do UK’s recent regulatory aims for crypto mean?

Cointelegraph reached out to the FCA to discuss its regulatory reach over the industry, the process of the temporary registration regime and the number of unregistered entities currently operating. The organization stressed that it does not oversee the entire cryptocurrency landscape and that it does not hold consumer protection powers. 

The FCA also noted that it was limited in registering U.K.-based cryptocurrency exchanges for Anti-Money Laundering purposes. It further explained that the TRR was set up to allow crypto firms already attempting to register to retain temporary trading permissions during the process.

During the TRR, firms could still apply to register with the FCA and can continue to do so after the cut-off in April 2022. The regulator also stressed that firms should not trade until they have registered. The FCA concluded assessments of all firms during the TRR, except those where it was deemed necessary to continue to have temporary registration.

The latest FCA list of firms with temporary registration had just one company listed as of Aug. 17. Revolut, which offers a host of digital banking services, is the sole business on this list which has slowly seen companies drop off through 2021 and 2022. The FCA would not comment on the individual firm’s ongoing temporary registration status.

A spokesperson for the FCA told Cointelegraph that the standards it set for registration were aimed at providing a safe environment for investors while supporting the innovation promised by the industry:

“Successful registration depends upon a firm meeting the minimum standards we expect to prevent money laundering and terrorist financing, and we have seen too many financial crime red flags missed by the crypto asset businesses seeking registration.”

The FCA will continue to process registration applications for cryptocurrency exchanges and service providers, stressing the importance of minimum standards to ensure provision of adequate systems to identify and prevent the flow of funds linked to criminal activities:

“We have seen, as a result, new regulated firms, many of them drawing on the use of crypto or its underlying technology. Strong, well-respected regulation helps innovators by providing consumer and investor confidence.”

While the FCA admitted that it lacked the teeth to crack down on unregistered operators in the country, it continues to keep tabs on these organizations. The spokesperson highlighted the fact that the U.K. Parliament controls regulatory perimeters and ultimately determines what the authority regulates.

Crypto.com secures UK registration for ‘cryptoasset activities’

As defined by the FCA, “cryptoasset activity” includes anything that involves exchanging one crypto for another or exchanging crypto for fiat and vice versa.

Digital asset exchange Crypto.com has just been given the green-light for “certain cryptoasset activities” in the United Kingdom, after receiving registration confirmation from the Financial Conduct Authority (FCA) on Tuesday. 

According to a Tuesday entry in the FCA’s Financial Services Register, FORIS DAX UK LIMITED has been registered to conduct “certain cryptoasset activities,” while also obtaining money laundering regulation status.

FORIS DAX UK LIMITED is listed as the registered U.K. trading name for Crypto.com.

Details on the registration are scarce at the time of writing, and Crypto.com and the FCA have yet to comment on it. However, the FCA website suggests that businesses carrying on crypto asset activity in the UK must register to be compliant with money laundering, terrorist financing and transfer of funds regulations.

As defined by the FCA, crypto asset activity includes exchanging crypto assets for money or money for crypto assets, or automating a machine to do so, and exchanging crypto assets for crypto assets.

On the other hand, the FCA has also compiled a list of 248 U.K. businesses that appear to be carrying on crypto asset activity that is not registered with the FCA for Anti-Money Laundering purposes.

Existing businesses in the U.K. were required to be registered with the FCA by January 9, 2021, in order to continue carrying on their business, with businesses that have applied but are still having their applications processed being granted temporary registration.

The FCA has enforcement powers allowing it to investigate and impose financial penalties on companies that are not in compliance.

Crypto.com, a Singapore-based cryptocurrency exchange that operates globally with over 50 million users, has been pursuing regulatory milestones at breakneck speed as of late.

The registration in the UK.. follows preregistration filings for crypto trading platforms seeking regulatory approval in Canada on Monday and approval as a virtual asset service provider in the Cayman Islands on Aug. 11.

On Aug. 8, the exchange also obtained virtual asset service provider and Electronic Financial Transaction Act registration in South Korea following the acquisition of payment service provider PnLink Co., Ltd. and virtual asset service provider OK-BIT Co., Ltd.

With these and other additional regulatory milestones, Crypto.com appears to be pushing to be regarded as a secure and trustworthy exchange within the digital asset market, and its CEO Kris Marszalek has been outspoken regarding their progress.


Crypto.com secures UK registration for ‘cryptoasset activities’

As defined by the FCA, “cryptoasset activity” includes anything that involves exchanging one crypto for another or exchanging crypto for fiat and vice versa.

Digital asset exchange Crypto.com has just been given the green-light for “certain cryptoasset activities” in the United Kingdom, after receiving registration confirmation from the Financial Conduct Authority (FCA) on Tuesday. 

According to an Aug. 16 entry in the FCA’s Financial Services Register, ‘FORIS DAX UK LIMITED’ has been registered to conduct “certain cryptoasset activities”, whilst also obtaining Money Laundering Regulation Status.

FORIS DAX UK LIMITED is listed as the registered UK trading name for Crypto.com.

Details on the registration are scarce at the time of writing and Crypto.com and the FCA are yet to comment on it, however, the FCA website suggests that businesses carrying on crypto asset activity in the UK must register to be compliant with money laundering, terrorist financing and transfer of funds regulations.

As defined by the FCA, crypto asset activity includes exchanging crypto assets for money or money for crypto assets, or automating a machine to do so, and exchanging crypto assets for crypto assets.

On the other hand, the FCA has also compiled a list of 248 UK businesses that appear to be carrying on crypto asset activity that is not registered with the FCA for anti-money laundering purposes.

Existing businesses in the UK were required to be registered with the FCA by 9 January 2021 in order to continue carrying on their business, with businesses that have applied but are still having their applications processed being granted temporary registration.

The FCA has enforcement powers allowing it to investigate and impose financial penalties on companies that are not in compliance.

Crypto.com, a Singapore-based cryptocurrency exchange that operates globally with over 50 million users, has been pursuing regulatory milestones at breakneck speed as of late.

The registration in the UK follows preregistration filings for crypto trading platforms seeking regulatory approval in Canada on Monday and approval as a Virtual Asset Service Provider in the Cayman islands on August 11.

On August 8 the exchange also obtained Virtual Asset Service Provider and Electronic Financial Transaction Act registration in South Korea following the acquisition of payment service provider ‘PnLink Co., Ltd.’, and virtual asset service provider ‘OK-BIT Co., Ltd.’.

With these and other additional regulatory milestones, Crypto.com appears to be pushing to be regarded as a secure and trustworthy exchange within the digital asset market, and its CEO Kris Marszalek has been outspoken regarding their progress.