FCA Demands Crypto Firms File Financial Crime Reports

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  • The FCA has more than doubled the number of companies who need to file financial crime reports every year
  • The expansion of the REP-CRIM now includes cryptocurrency exchange providers and custodian wallet providers
  • The move comes as part of the UK’s efforts to implement AMLD5 regulations

The UK’s financial watchdog, the Financial Conduct Authority (FCA), has expanded the number of companies required to file an annual financial crime report to include cryptocurrency firms. The number of firms now required to file a REP-CRIM has risen from approximately 2,500 to approximately 7,000, with the report intended to provide the FCA with “information on a range of indicators that reflect the potential money laundering risks of firms’ based on their regulated activity…”.

“Potential Money Laundering Risks”

The FCA published the extension to the REP-CRIM guidelines yesterday following a consultation last August, explaining why cryptocurrency companies had been included in the extended list:

We based our assessment of which firms this extension will apply on our understanding of the potential money laundering risks. This policy statement proposes that additional firms and cryptoasset businesses should be brought into scope of the return based on their business activities and the potential money laundering risks.

This puts crypto firms in the same bracket as banks and building societies, all of whom have had to file the reports since 2016. The report itself consists of 35 questions designed to compile data on potential risk areas of financial crime within the companies in question. The extension is primarily aimed at capturing cryptocurrency exchange providers and custodian wallet providers.

FCA Helping to Implement AMLD5

The move by the FCA to expand the number of companies coming under the REP-CRIM umbrella has been done in part as a result of the EU’s 5th Money laundering directive (AMLD5), details of which were published in December 2019.

The UK has been working implement AMLD5 since 2020, and the expansion of its oversight of cryptocurrency companies through REP-CRIM reporting is a further step towards this.