UK Treasury to Enhance AML Efforts Through Crypto Supervision Changes

Jimmy Aki
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The UK Treasury has released a new proposal on anti-money laundering regulation, which includes the activities of the country’s crypto industry.

This proposed change to AML efforts in the UK stemmed from the Treasury’s review of Money Laundering, Terrorist Financing and Transfer of Funds (Information on Payer) Regulations 2017 (MLRs).

Focus on “Smarter Regulation”

The Consultation paper revealed a “smart regulation” approach that will prioritize efficiency with minimal business burdens.

“This includes minimising regulatory burden and future proofing regulations; using regulation only as an absolute last resort and creating a landscape of responsive and accountable regulators,” according to the document.

Meanwhile, there are some limitations of MLRs, which were highlighted in this paper – stressing the need for “an efficient supervisory regime”.

At press time, the Financial Conduct Authority (FCA) monitors some crypto firms while others come under MLRs. But, the proposed changes would significantly expand FCA’s oversight functions..

As stated in the paper, “MLRs can only function effectively within an effective regulatory regime.” Therefore, this new proposal mandates all MLR-registered institutions to abide by FCA regulations. It is also the body that regulates crypto exchanges and asset custody services in the UK.

Notably, inconsistencies have been identified between MLRs and the Financial Services and Markets Act 2000 (FSMA 2000) regarding control standards in the country’s crypto market. But this consultation paper has proposed how MLRs and FSMA can align to streamline processes and ensure consistent oversight.

The proposed change is an important step toward creating a robust and secure crypto ecosystem in the UK.

In light of this, the UK Treasury hopes to foster innovation while mitigating risks like financial crime. This is by strengthening AML measures and consolidating oversight under FCA.

While this proposed regulation by the Treasury may elicit concerns among crypto industry experts, its successful implementation rests on the government’s goal to fulfill “smarter regulation.” This will provide secure environments without impeding innovation.

Focus on Anti-Money Laundering (AML) Controls

The UK government is making vibrant decisions to enhance crypto regulations that align with the country’s anti-Money Laundering (AML) practices. This is a step similar to the proposal of the European Securities and Markets Authority (ESMA) on strict rules for crypto companies operating outside the European Union (EU).

One of the latest developments is a proposal to make effectual changes to strengthen AML efforts.

While these changes will extend the regulatory coverage of the FCA, the UK has also commenced the enforcement of its Travel Rule on crypto asset businesses.

This rule mandates businesses to collect, verify, and share information about crypto-asset transfers to meet AML/CTF rules on-chain.

Other countries are already adopting the Travel Rule, including the U.S., Germany, Japan, Singapore, and Switzerland.

Overall, these developments show the strong position of the UK government in regulating crypto assets, which are steps towards anti-money laundering (AML) measures and regulatory compliance.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.