UK Treasury warns of money laundering risks via cryptocurrency

The UK Treasury presented a report on the department’s work over the past two years, highlighting the risks associated with crypto.

In the department’s latest report, experts indicate that from 2022 to 2023, cryptocurrency, banking, and asset management created the greatest risks associated with money laundering.

The document “Anti-money laundering and counter-terrorist financing” states that during the specified reporting period, the U.K. Financial Conduct Authority (FCA) employed more than 50 financial crime specialists who examined the activities of 238 firms. Approximately one-third were involved in overseeing the activities of crypto firms.

“As part of the FCA’s risk-based approach, it applied a robust assessment process at the registration gateway for these businesses, and identified significant weaknesses in firms’ controls, resulting in a large number of firms withdrawing their applications or being rejected or refused by the FCA.”

Other watchdog groups outside the core FCA staff are reported to have opened 375 more cases related to financial crime. The report says 95 investigations are related to cryptocurrencies.

In October 2023, the FCA stated that crypto companies were noncompliant with new marketing rules. The regulator issued 221 non-compliance warnings and identified three common shortcomings among cryptocurrency companies. The agency also said it would take action against firms that do not comply.

The announcement came shortly after the U.K.’s crypto firm marketing regime began enforcing the rules, which requires that such firms’ advertising be clear, fair, and not misleading.