UK FCA Report: Weak Money Laundering Controls Lead to High Crypto Registration Rejections
UK FCA Report – In the past 12 months, nearly 90% of crypto firms applying for registration in the United Kingdom have failed to meet the standards set by the Financial Conduct Authority (FCA). According to the FCA’s 2024 annual report, the primary issues cited were deficiencies in fraud protection and money laundering protocols.
The report indicates that over 87% of crypto registrations were either withdrawn, rejected, or refused due to weak anti-money laundering (AML) controls. Out of 35 applications submitted over the past year, only 4 were approved. 15 applications were withdrawn, and 9 were outright rejected.
The FCA noted that submissions lacking essential components for assessment, or those with poor-quality key components, were deemed invalid. “We have rejected submissions that didn’t include key components necessary for us to carry out an assessment, or the poor quality of key components meant the submission was invalid,” stated the FCA in a feedback statement.
New Financial Promotion Rules
In June 2023, the FCA introduced a new “financial promotion perimeter” to regulate crypto advertising in the UK. This measure aims to ensure that crypto advertisements are clear, fair, and not misleading. This step reflects the growing need for transparency in the crypto market.
Increased Public Awareness
The report also highlighted that public awareness of potential crypto scams has increased. 63% of UK consumers who contacted the FCA about a scam did so before investing, marking a 5% rise from the previous year. This uptick in caution indicates a more informed and vigilant public when it comes to crypto investments.
Concerns About the UK Market
On August 30, international law firm Reed Smith suggested that crypto firms might consider looking outside the UK for registration due to extremely long wait times and insufficient political will at the FCA to process applications promptly.
The report reveals that, over the last three years, the FCA has taken an average of 459 days to process a crypto firm’s registration. The regulator has collectively spent 25 years’ worth of manpower on these applications. During this period, 186 applications were withdrawn.
Reed Smith partner Brett Hillis warned, “If it’s the case that applications are falling because crypto firms have essentially given up waiting and started looking abroad, this should send a clear warning about London’s competitiveness.”
FAQ
Why did 90% of crypto firms fail to meet the UK FCA’s registration standards?
Nearly 90% of crypto firms failed to meet the UK Financial Conduct Authority’s (FCA) registration standards primarily due to inadequacies in their fraud protection and anti-money laundering (AML) protocols. The FCA’s report for 2024 highlighted that 87% of the registrations were withdrawn, rejected, or refused due to weak money laundering controls.
How many crypto firm registration applications were approved by the FCA in the last year?
Out of the 35 applications for crypto firm registration submitted to the FCA in the past year, only 4 were approved. Additionally, 15 applications were withdrawn and 9 were rejected.
What are the new regulations implemented by the FCA regarding crypto advertising?
In June 2023, the FCA finalized a new “financial promotion perimeter” aimed at ensuring that crypto advertising in the UK is clear, fair, and not misleading. This regulation is intended to protect consumers from deceptive crypto ads.
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