Bitcoin exchanges might soon share money laundering data in the UK 🚨 This article is 4 years old...
Bitcoin exchanges might soon share money laundering data in the UK
2 min read
Updated: Aug. 25, 2020 at 11:29 pm UTC
Photo by Veliko Karachiviev on Unsplash
In the latest proposal concerning Bitcoin and crypto businesses, the UK’s top financial regulator, the Financial Conduct Authority, said all firms would be compelled to share reports on potential money laundering.
Bitcoin under the scanner
According to a document on August 24, the FCA plans to legally oblige UK-based crypto firms to share any suspicious transactions and accounts flagged under money laundering. All businesses will fall under this purview if the proposal is passed.
The proposal is an extension to a 2016 law governing financial firms — that such businesses must necessarily prepare and submit documents on potential money laundering in customer accounts.
And in the new document, it includes all crypto firms, “cryptoasset exchange providers and custodian wallet providers must provide the FCA with a report about their financial crime risk irrespective of their total annual revenue,” it says.
Some of the points include firms flagging accounts originating in “high risk” region jurisdictions linked to money laundering and tax evasion. More reasons include the number of customers who “refused or exited for financial crime reasons,” and “the top three most prevalent frauds.”
Any additional data requested would add to the long list of obligations imposed on cryptocurrency companies by various regulators.
Earlier this year, the European Union launched the fifth anti-money laundering directive (AMLD5), requiring cryptocurrency companies, by law, to liaison with regulators to quell money laundering.
For now, the UK proposal is still under development. The regulator is seeking comments until November 23 and plans to publish a policy statement, but not before the first quarter of 2021.
Crypto transactions meet a legal block
All crypto companies will provide information from their next accounting reference date after 10 January 2022. Interestingly, Bitcoin and crypto companies have a cut-off of January 10, 2021, to register their business with the FCA, so the proposal kicks into effect a day later.
As to why the dates are so close? It’s to ensure the FCA has enough data before it pours time, resources, and manpower into “firms that carry on activities that pose potentially higher [money laundering] risks.”
The UK’s concerns come as most cryptocurrency companies — such as popular Bitcoin exchanges and wallets, are registered in tax havens such as the Cayman Islands, but operate all over the world.
But for the FCA, “operates” legally means “where the firm carries on its business or has a physical presence through a legal entity,” putting all firms under their purview.
The move follows an earlier Financial Action Task Force, an international financial crime watchdog — a recommendation that all crypto companies must regularly share information about their customers when processing transfers even to other crypto firms.
So much for privacy and decentralization — the law eventually catches on.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.