UK Suggests More Robust Anti-Money Laundering Regulations for Cryptocurrency Companies
The UK Treasury has unveiled a new draft designed to strengthen anti-money laundering regulations, placing crypto companies front and center. These recommendations aim to seal loopholes that have allowed financial risks to remain undetected. Concurrently, these adjustments are being presented as feasible enough to enable businesses to continue operations with minimal disruption.
Enhanced Scrutiny of Crypto Ownership and Authority
A significant alteration targets how the Financial Conduct Authority assesses who holds power within a crypto firm. Currently, the emphasis is primarily on beneficial owners, which can overlook individuals who truly make the decisions. The revised regulations broaden this definition to encompass anyone with genuine authority and necessitate regulation with a “fit and proper” criterion. The reporting threshold for changes in control will also decrease from 25 percent to 10 percent. This aligns crypto firms with other entities in the financial sector, granting regulators improved opportunities to intervene early when necessary.
Harsher Inspections of Banking Partnerships
The proposals also target how crypto firms interact with correspondent banks, particularly those located abroad. These connections frequently serve as a bridge between crypto enterprises and conventional financial systems. The updated regulations would mandate that crypto firms conduct more comprehensive background checks on these banking associates and refrain from engaging with shell banks entirely. This initiative aims to mitigate the risk of funds being funneled through inadequately regulated structures.
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Increased Precision in Customer Risk Assessments
There’s also a more targeted approach to customer due diligence, too. Currently, firms often implement enhanced checks universally as a precaution. The proposed regulations recommend that these deeper assessments be applied only when a transaction is particularly large or intricate, or when it involves nations identified as high risk. The objective is to enable firms to allocate their resources where the actual risk lies, instead of wasting time and funds on low-risk scenarios.
Increased Clarity for Trust Arrangements
Trusts associated with crypto companies are also included in the revisions. The new regulations will broaden the types of trusts that must register with the UK’s Trust Registration Service. Simultaneously, they will relax requirements for lower-risk setups, such as small-value trusts or those meant for estates. This is a step towards enhanced visibility without imposing excessive paperwork on straightforward arrangements.
Essential Updates for Digital Operations
There’s also a practical change in currency. Monetary thresholds will be shifted from euros to pounds to accurately reflect how UK businesses function. Additionally, new guidance is anticipated to aid firms with digital identity verification, which is becoming increasingly prevalent in compliance processes.
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A Defined Timeline for Input and Implementation
The public has until the end of September to provide feedback on the draft. Once that period concludes, the regulations are expected to move to Parliament early next year. If approved, new guidelines will follow to assist crypto firms in adapting to the revised framework.
Future Directions for the UK Crypto Landscape
These modifications indicate that the UK is increasingly treating crypto with the same level of seriousness as traditional finance. Enhanced checks, greater transparency, and more defined regulations are all part of the trajectory regulators are pursuing. Crypto firms will need to stay aligned with these developments as the UK solidifies a more organized method of overseeing digital assets.
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Key Takeaways
- The UK Treasury has put forward new anti-money laundering regulations that specifically enhance oversight of crypto firms and their leaders.
- The control definition will be broadened, and the reporting threshold for ownership adjustments will decrease from 25% to 10%, thereby increasing regulatory visibility.
- Crypto companies will be required to perform more stringent checks on correspondent banking relationships, particularly with offshore or shell banks.
- Customer due diligence requirements will become more focused, emphasizing enhanced checks on high-risk nations or particularly large and intricate transactions.
- Trust registration and identity verification will also see updates, with thresholds now measured in pounds and new digital identity guidelines to price floor compliance.
The post UK Proposes Stronger Anti-Money Laundering Rules for Crypto Firms appeared first on 99Bitcoins.
