The U.K. Financial Conduct Authority will be appointed as the supervisor of U.K. cryptoasset businesses under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 as a result of amendments that will be made to the Money Laundering Regulations due to come into force on January 10, 2020. The amendments are being made in order to implement the EU’s Fifth Money Laundering Directive, which Member States must introduce as part of their national laws by January 2020.
In April 2019, HM Treasury launched a consultation on its proposed implementation of 5MLD, including setting out the scope of cryptoasset activities that will be captured by the amended Money Laundering Regulations. The Treasury has not yet published its response to the consultation, but it has made clear that it intends the Money Laundering Regulations to cover the activities specified in 5MLD as well as a wider range of activities recommended by the Financial Action Task Force. HM Treasury’s consultation proposed the following cryptoasset activities to be covered under the amended Money Laundering Regulations: (i) cryptoasset exchange providers; (ii) cryptoasset automated teller machines (i.e. physical kiosks allowing users to exchange cryptoassets and fiat currencies); (iii) custodian wallet providers; (iv) peer to peer providers; (v) issuers of new cryptoassets; and (vi) publication of open-source software e.g. non-custodian wallet software.
Businesses carrying out these activities in the UK should therefore assume they will have to register with the FCA and comply with the Money Laundering Regulations from January 10, 2020, although HM Treasury may decide to extend or reduce the range of activities. Existing cryptoasset businesses that were carrying out cryptoasset activity prior to January 2020 may continue conducting their activities in compliance with the Money Laundering Regulations, but must have registered with the FCA by January 10, 2021. New cryptoasset businesses that intend to commence cryptoasset activities after January 10, 2020 must be registered before they can conduct that activity. The FCA Gateway for applications will open on January 10, 2020 and firms that need to be registered by January 10, 2021 must have submitted their applications by October 10, 2020.