UK Regulator Extends Temporary Registrations Regime as Crypto Firms Fail to Meet AML Rules

Many companies operating with cryptocurrencies are not meeting anti-money laundering regulations, the U.K.’s Financial Conduct Authority revealed. The government agency has extended its temporary registration scheme after facing a growing number of crypto firms that are withdrawing their applications.

FCA Extends Temporary Registrations Regime Till End of March 2022

The Financial Conduct Authority (FCA) announced Thursday it’s extending the end date of the Temporary Registrations Regime (TRR) for crypto businesses to March 31, 2022. The regulatory body pointed out that a “significantly high number” of companies are not meeting current anti-money laundering (AML) requirements which have resulted in “an unprecedented number” of entities withdrawing their applications. In a statement published on its website, the FCA noted:

The extended date allows cryptoasset firms to continue to carry on business while the FCA continues with its robust assessment.

Last year, the financial regulator said that all businesses trading cryptocurrencies on Jan. 10, 2020, are subject to the country’s updated Money Laundering Regulations. Initially, they were required to register with the FCA by Jan. 10, 2021. Later on, the compliance deadline was moved to July 9 and the TRR scheme was introduced to allow cryptocurrency firms that applied for registration before Dec. 16, 2020, to continue to work while their applications are still being processed.

Brits Warned FCA Does Not Have Consumer Protection Powers

In this week’s announcement, the FCA explains that Britain’s anti-money laundering and counter-terrorist financing legislation is tailored to protect against “enabling the transfer and disguise of funds from criminal activity, or funding of terrorist groups.” The agency, which operates independently under the U.K. government, further stated:

While this is not the only element that the FCA will assess in relation to an applicant, the FCA will only register firms where it is confident that processes are in place to identify and prevent this activity.

Crypto assets are highly speculative and prone to losing value quickly, the financial authority warned, emphasizing that it has not been granted powers to provide consumer protection for the activities of British crypto companies, even when they are registered with it. If consumers invest in cryptocurrencies, they should be prepared to lose their money, the FCA added, stressing it is unlikely that they will have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme.