- FATF discovered gaping loopholes in the U.K.’s ant-AML and crypto strategies
- The Taskforce says there is a need for the U.K. to overhaul its reporting mechanisms
- FATF wants the U.K. to extend regulations to cover AML/CFT requirements
The Financial Action Task Force wants the United Kingdom to up its game as far as it concerns cryptocurrency regulation. This will help strengthen the country’s cryptocurrency sector and help in the fight against money laundering and terrorist financing.
UK to Introduce Crypto Regulations Soon?
The intergovernmental financial security body that was formed by the G7 in 1989 to conduct research on matters to do with money laundering expressed this desire their latest report released on December 7, 2018, which showed there were gaping loopholes in the country’s anti-AML strategies.
The task force, which has been looking critically at the challenges involving cryptocurrencies since February 2018, acknowledged that the UK was trailing the blaze with a “robust understanding” on the areas monitoring and preventive measures, it left a lot to be desired with dealing with cryptocurrencies. The report said:
“The UK acknowledges the inherent vulnerabilities associated with the anonymity of VCs [virtual currencies], and while the risk of ML/TF in this area is assessed as low, the UK acknowledges that there are intelligence gaps and VCs are being used in illicit activity […] as a result, the UK intends to regulate virtual currency exchange providers under its implementation of the EU’s fifth Anti-Money Laundering Directive.”
The FATF further says in the report that as part of its dedicated “mutual evaluation” of the UK’s Anti-Money Laundering (AML) and Combat Financing Terrorists (CFT), they discovered an urgent need for the government to urgently overhaul its mechanisms for reporting suspicious activities. The task force found that sectors of the economy such as high-value dealers and real estate agents did not understand the risks associated with cryptocurrency-based money laundering and how to mitigate them. Saying that Virtual currency exchange providers were not covered by the existing AML/CFT requirements, the report added:
“This is an emerging risk and there is not yet evidence to suggest that broad scale ML/TF is occurring in the UK through this relatively small sector.”
The UK has made several initiatives towards regulating the local cryptocurrency industry. The regulatory shift caused the local blockchain business owners to create an association to help them get official attention. The different initiatives have been greeted with mixed reactions with some stakeholders fearing the possibilities of some instruments like Bitcoin futures being blacklisted under the new rules.
While acknowledging that the UK had “identified and assessed the risks associated with new payment methods” and there were plans to extend regulations to cover AML/CFT requirements, FATF has urged the UK to “progress plans to extend supervision to virtual currency exchange providers.”
