The Financial Conduct Authority (FCA) of the UK allocated 30% of its financial crime specialists to oversee crypto asset businesses in 2023 due to the susceptibility of these sectors to money laundering activities. The FCA conducted risk assessments across various sectors like retail banking, wholesale banking, wealth management, and crypto-asset firms to identify those at high risk of being misused for financial crime. The regulator’s team of specialists conducted numerous reviews, including 231 desk-based reviews and seven on-site visits. Additionally, other supervisory teams within the FCA identified 375 potential cases, with 95 specifically related to crypto assets. The regulator extended the REP CRIM survey to crypto businesses to gather information on their anti-money laundering controls to better pinpoint risks and tailor supervisory actions.
UK crypto firms have faced challenges as the FCA, which has been the AML watchdog for UK crypto businesses since January 2020, implemented a rigorous evaluation process for new registrations. This process revealed significant shortcomings in firms’ anti-money laundering controls, leading to many applications being withdrawn, rejected, or refused. The FCA’s March business plan emphasizes its commitment to consumer protection and a fair crypto market, along with a focus on identifying and addressing crypto market abuse. The regulator aims to promote a competitive UK financial sector within the global landscape by strengthening its oversight and enforcement efforts.
The FCA cracked down on misleading advertisements, removing a higher number of misleading ads compared to the previous year as a result of intensifying its oversight of financial promotions. Stricter advertising rules for high-risk investments were implemented in July 2023, requiring companies to disclose critical information about crypto products on various online platforms. The FCA issued new guidelines in March targeting financial promotions on social media, including formats like memes, reels, and gaming streams, to ensure fair and accurate information with no room for misleading content. By enforcing these guidelines, the FCA aims to protect consumers and maintain market integrity.
The FCA’s focus on combating financial crime extends to its efforts to monitor and regulate crypto asset businesses, recognizing the risks associated with these sectors. By conducting risk assessments, reviews, and on-site visits, the FCA aims to identify and address potential money laundering activities in various sectors, particularly in crypto assets. The implementation of the REP CRIM survey for crypto businesses allows the regulator to gather information on AML controls to effectively pinpoint risks and tailor supervisory actions accordingly. The FCA remains committed to consumer protection, fair market practices, and promoting a competitive UK financial sector within the global landscape through its enforcement efforts and oversight of financial promotions.
In conclusion, the FCA’s efforts to combat financial crime, regulate crypto asset businesses, and crack down on misleading advertisements demonstrate its commitment to safeguarding consumers and maintaining market integrity. By allocating resources to oversee high-risk sectors, conducting risk assessments, and implementing stricter regulations, the FCA aims to address money laundering activities effectively and promote a fair and competitive financial sector in the UK. Through its continued enforcement efforts, the FCA strives to protect consumers, combat financial crime, and uphold the integrity of the financial services industry.
