UK minister: Digital currency companies falling short on AML obligations

Getting your Trinity Audio player ready...

Digital currency companies in the United Kingdom are falling short on their obligations towards anti-money laundering measures, according to a government minister.

John Glen, economic secretary to the Treasury, said only five digital currency firms had registered with the Financial Conduct Authority (FCA) since January 2020, under its new supervisory role for upholding AML standards in the sector.

In official comments released over the past week, Glen said there had been significant difficulties in registering digital currency companies under the regulations, resulting in a majority of applicants for AML approval withdrawing their licenses.

“Of the firms assessed to date over 90% have withdrawn their application following FCA intervention. There are 167 crypto asset businesses with outstanding applications.”

Glen also highlighted that some 77 new firms were awaiting assessment of their applications to the FCA.

According to the minister, the regulator has been unable to process the majority of applications due to failings around robust new AML measures imposed on digital currency businesses, as well as a failure among firms to hire appropriate staffing.

In order to deal with the backlog, the FCA has introduced a new ‘Temporary Registration Regime’ for firms until July 9, allowing them to continue trading until that date without having secured the necessary AML approvals.

The minister said the U.K. Treasury had been liaising with the FCA, as well as other industry stakeholders, over its consultation on the regulatory framework applicable to the digital currency sector.

“Any future regulatory regime for cryptoassets set out by the Government in light of this consultation will aim to balance the potential risk to consumers with the ambition to stimulate competition and innovation in the industry.”

The Financial Conduct Authority has been given an increasing role in regulating the digital currency industry in recent months. Back in March, it announced firms would be expected to submit annual financial crimes reports. Previously, the regulator outlawed the sale of digital currency derivatives to retail investors.

See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers