UK crypto firms now required to share financial crime report

As of 2016, only larger firms had been expected to submit REP-CRIM reports

The Financial Conduct Authority (FCA) has released a new policy statement on its website announcing that all UK crypto firms must now submit financial crime reports on a yearly basis, regardless of annual revenue. Within the new financial crimes reporting sphere are cryptoasset business, following plans released eight months ago alluding to the policy change.

The new policy statement suggests that REP-CRIM reporting is essential when it comes to tackling money laundering crimes, therefore firms must be compliant in order to aid regulators’ efforts. As of 2016, only larger firms had been expected to submit REP-CRIM reports. In terms of number, the firms now required to release REP-CRIM statements to the FCA has now risen from 2,500 to around 7,000.

The UK’s Financial Conduct Authority said: We will strengthen our rules to prevent money laundering, as well as working with domestic and international stakeholders to support a joined-up approach to cryptoassets.

The UK-based crypto firms now included under the new policy’s umbrella will be obliged to submit financial crime reports by the date specified by the FCA. The regulator first announced that these plans were taking shape in August last year, and stated that the upcoming policy was being refined in an attempt to take on a more data-focused outlook on fintech regulation standards.

The FCA stated: REP-CRIM provides us information on a range of indicators that reflect the potential money laundering risks of firms’ based on their regulated activity and helps us to supervise firms. In our 2020/21 Business Plan, we said we would consider extending the REP-CRIM reporting obligation to more firms.

The cryptoasset companies now required to play their part in the enhanced REP-CRIM regime are defined in terms of custodial wallet providers and cryptocurrency exchanges. This inclusion is a reaction to the FCA’s past oversight when it came to virtual currency environments.

Since January 2020, The FCA had been supervising Anti-Money Laundering compliances for crypto businesses in the UK. Digital asset firms face compulsory registration in the virtual currency world, and a vast backlog of such applications meant that the FCA had to establish a licensing regime on a temporary basis in December of last year.