- The FCA has rejected or refused over 87% of crypto registration applications to tighten AML controls
- The FCA has significantly raised rejection rates for crypto firms in the past year
- The report has been released following the country’s first arrest related to illegal crypto ATM use
The Financial Conduct Authority (FCA) has rejected or refused over 87% of crypto registration applications in the past year, as part of its ongoing efforts to tighten anti-money laundering (AML) controls. The latest data, revealed in the FCA’s 2023-2024 annual report, shows a significant rise in rejection rates for crypto firms, highlighting the regulator’s stringent approach towards ensuring high standards in the crypto space. The report comes just a week after the first arrest was made in the country over the illegal use of a crypto ATM.
FCA Crackdown is Working
The high rejection rate, which has significantly increased from last year, reflects the FCA’s broader mission to enhance the integrity of the UK’s financial system, particularly in high-risk areas like crypto assets. The rising rejection rates come as the FCA works to ensure that companies operating in this space have robust AML measures in place, addressing concerns about money laundering, fraud, and other financial crimes associated with digital currencies.
The FCA’s stringent approach is not limited to the crypto sector. While only 21% of firms applying for money laundering supervision across traditional financial sectors faced rejection, the crypto industry has seen a much higher failure rate.
The difference underscores the heightened risks regulators associate with the burgeoning world of digital assets, with many firms struggling to meet the FCA’s high standards, leading to an unprecedented number of applications being withdrawn or refused outright.
44 Firms Approved in the Last Year
Despite these challenges, the FCA has approved 44 crypto firms for money laundering registration, demonstrating that meeting the regulator’s rigorous criteria is possible. Firms that have been successful in securing registration have benefited from the FCA’s guidance, which clearly outlines best practices and compliance expectations.
This transparency has helped some companies adapt and align with the UK’s regulatory framework.
The criteria also apply to cryptocurrency ATM owners; when no operators in the country obtained FCA approval in March 2022, hosting them was declared illegal. Raids have been carried out in the years since, and last week saw the first arrest for the unlicensed operation of a cryptocurrency ATM.
This shows that the FCA is serious about compliance, putting non-compliant operators on notice.
