The UK Treasury has unveiled a consultation paper outlining proposed revisions to anti-money laundering (AML) regulations, with a significant focus on regulating crypto assets.
Motivated by a thorough review of the Money Laundering Regulations 2017 (MLRs), the proposed changes aim to introduce “smarter regulation” to reduce administrative burdens, ensure regulatory durability, and foster an environment prioritizing accountability and responsiveness.
A key aspect of the proposed reforms involves enhancing the supervisory and registration framework for crypto-related entities. The consultation underscores the importance of a robust supervisory regime to enhance MLRs effectiveness. Currently, the Financial Conduct Authority (FCA) oversees institutions under both MLRs and the Financial Services and Markets Act 2000 (FSMA). The paper suggests simplifying regulations by removing the need for MLRs authorization for entities regulated under MLRs, while still requiring FCA regulation.
Moreover, the consultation paper outlines a broadening of the FSMA’s scope to encompass activities such as operating crypto exchanges and custody services. This expansion would necessitate registration with the FCA for MLRs supervision, extending oversight to previously unregulated crypto assets.
A significant aspect under discussion is aligning MLRs requirements with those of FSMA to standardize regulatory standards and control mechanisms across the financial sector.
Additionally, the UK is considering integrating the OECD’s cryptocurrency reporting standards into its legal and financial framework. This move aims to enhance revenue generation and improve tax transparency by facilitating cross-border sharing of cryptocurrency transaction data.
The integration of international standards reflects the UK’s commitment to adapting its financial system to the challenges posed by fintech advancements and the expanding crypto market. By aligning with global norms, the UK aims to ensure robust tax collection mechanisms and bolster its financial integrity.