There is much confusion regarding the need for Anti-Money Laundering (AML) Registration among firms in the UK.
If you are conducting any exchange of cryptoasset for money or any other medium of exchange, as a business in the UK, then you need to be registered for AML with the FCA.
What Do They Mean By Cryptoasset?
“cryptoasset” means a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored or traded electronically;
How is money defined?
- money in sterling, or money in any other currency, or
- money in any other medium of exchange, but does not include a cryptoasset; and
- it can also mean that “cryptoasset” includes a right to, or interest in, the cryptoasset concerns
So what do i have to be doing in my business to be caught by the regulations?
There is a range of definitions in the legislation that confirms the regulated activity, but if you are a Cryptoasset exchange providers and custodian wallet providers the you are likely to be caught.
In the Money Laundering Regulations, a cryptoasset exchange provider means a UK business that by way of business provides one or more of the following services, whether and including if they do so as creator or issuer of any of the cryptoassets involved, when providing such services.
These services are
(a) exchanging, or arranging or making arrangements with a view to the exchange of, cryptoassets for money or money for cryptoassets,
(b) exchanging, or arranging or making arrangements with a view to the exchange of, one cryptoasset for another, or
(c) operating a machine which utilises automated processes to exchange cryptoassets for money or money for cryptoassets.
Again, in the Money Laundering Regulations a Custodian Wallet Provider means a UK business who by way of business provides services to safeguard, or to safeguard and administer cryptoassets on behalf of its customers, or private cryptographic keys on behalf of its customers in order to hold, store and transfer cryptoassets, when providing such services.
So, if you have a UK registered office and carry on a day to day management of these activities, or operate an ATM facility in the UK (irrespectice of the geographic location of the cryptoasset activity is conducted) or have any UK presence that is engaged in or facilitates cryptoasset activity, you will likely need to be registered by the FCA to operate from 10th Jan 2021.
However, the FCA have warned that to do this, you need to register before the 30th June 2020 for applications from existing businesses (operating before 10 January 2020) to be received for priority review to check that they are ready to be determined. For existing firms, if they do not submit a complete application by 30 June 2020, the registration may not be processed by 10 January 2021 and if they are not registered with the FCA, on 10 January 2021 they will have to cease trading.
New businesses will need to be registered before 10th Jan 2021 or they will have to cease trading on that day until they are.
How can we help firms?
At LS Consultancy, we offer a number of distinct products and services which can be deployed individually or combined to form a broader solution.
When you face business or regulatory challenges, we provide solutions that are tailor-made to your needs with a view to releasing your energies to focus on your clients.
We work both within individual teams and across many departments to offer a complete solution, with a range of cost effective, compliance and AML solutions which are uniquely suited to supporting firms.