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Cryptoasset Businesses and the Fifth Money Laundering Directive

Posted on 28 January 2020

On 10 January 2020, the UK's Money Laundering Regulations were amended to incorporate changes brought about by the fifth money laundering directive.  Of greatest significance for the FCA is the addition of cryptoasset exchanges and wallet providers to the businesses supervised by it for AML purposes.  The new Regulations provide the FCA with additional powers to supervise those cryptoasset businesses including the power to give directions and impose reporting requirements. 

Cryptoasset businesses must apply to the FCA for registration and the FCA is entitled to refuse registration to those applicants it does not regard as fit and proper (including those businesses without the necessary skills and experience).  Existing businesses had until 10 January 2020 to get registered, but the FCA has indicated that it will start supervising businesses from the 10 January 2020 irrespective of whether they have applied to be registered or not and this may include enforcement action.  However, we expect that the initial focus of the FCA will be to use the registration process to exclude a number of operators the FCA does not regard as compliant and is likely to give rise to a number of contested hearings.

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