UK's FCA Flagged Some Crypto Firms Seeking Regulatory Approval to Law Enforcement

A number of those investigations into financial crime or "direct links to organized crime" are ongoing, an official at the Financial Conduct Authority said.

AccessTimeIconJan 27, 2023 at 11:53 a.m. UTC
Updated Jan 27, 2023 at 4:49 p.m. UTC

The U.K.'s financial regulator referred some crypto companies that tried to register with it to law enforcement agencies, an official at the agency said in a letter published on Thursday.

"Overall, in the small number of cases where we have identified likely financial crime or direct links to organized crime we have referred these to law enforcement agencies," Sarah Pritchard, executive director of markets supervision, policy and competition at the Financial Conduct Authority, said in a letter to the Treasury Select Committee dated Jan. 19. "Some of those law enforcement investigations remain ongoing."

On Wednesday, the regulator said it had received 300 applications from crypto companies seeking approval to serve customers in the country under its anti-money laundering regime. Only 41 companies managed to register with the regulator while 195 companies were either refused or withdrew their application, the FCA said. Of the 300 applicants, 29 were rejected for failing to meet the FCA's requirements for approval.

Although the regulator has faced criticism for taking a tough stance on crypto, he deemed it necessary, FCA CEO Nikhil Rathi said in a meeting last November.

"The FCA took a robust position during authorization so that the risk of criminality was significantly reduced, thus the high rejection rate," Pritchard said in the letter.

The U.K. has been increasing its efforts to regulate crypto. The police has stationed crypto tactical advisors across the nation. The Economic Crime and Corporate Transparency Bill being debated in Parliament will give law enforcement agencies more power to seize and freeze crypto used in criminal activities, while the Financial Services and Markets Bill could expand the FCA's own powers to police the industry.

The FCA declined to reveal how many crypto companies it had referred to law enforcement agencies.


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Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.