The UK Financial Conduct Authority (FCA) has recently rejected an application from a company seeking to register as a cryptoasset exchange provider. The application, filed back in June 2022, revealed significant shortcomings in the company’s anti-money laundering (AML) controls and risk management practices.
The FCA noted that the proposed anti-money laundering measures were inadequate and did not meet the necessary legal standards. If allowed to operate, the firm would have posed a considerable risk to public safety. Key failures highlighted in the application included:
– A lack of understanding and documentation regarding potential risks.
– Ignoring the National Risk Assessment, which outlines critical AML and terrorist financing threats within the UK.
– Insufficient customer risk assessments, coupled with failures in enhanced due diligence and reporting of suspicious activities.
These factors are vital in addressing the risks associated with money laundering, terrorist financing, and the evasion of sanctions that could arise from customer engagements.
To operate legally within the UK, all cryptoasset exchange providers must obtain registration with the FCA and adhere to the country’s money laundering regulations.