If you are looking to start a crypto business in the UK, you might struggle to get it registered with the Financial Conduct Authority (FCA) unless you can satisfy the watchdog with your Anti-Money Laundering (AML) measures.
In its annual report for 2023/24, published on Thursday, the financial regulator stated that over 87% of crypto registrations were “withdrawn, rejected, or refused due to weak money laundering controls.”
The FCA said it has taken strict measures to monitor firms to ensure they have the “right systems and controls in place” before authorizing them.
As part of this monitoring, the number of crypto firms rejected after being supervised by the FCA has increased by nearly 88%. The FCA report stated that many crypto firms under its supervision could not meet the required standards, noting that “36% were rejected, withdrawn, or refused, compared to 21% in 2021/22.”
Altogether, there are only 44 crypto firms in the country with money laundering registration, according to the FCA report.
Cracking down on “unfair practices,” the FCA also canceled 1,261 companies, which is double the number of cancellations from 2022/23.
Losses From Investment Frauds Reduced
The FCA claims its ongoing efforts to curb investment fraud have been successful. Losses suffered by victims of investment fraud dropped by 40.8% year-on-year (y-o-y) in 2023.
There has been a steady decline in the “rate of growth of investment frauds” in the UK. In 2021, it was 28%, while in 2023 it was just 4.23%.
As part of its efforts, the FCA introduced new restrictions on marketing crypto assets to consumers in the UK. The regulatory watchdog also confirmed it had issued warnings to several influencers to ensure their social media ads comply with the new rules for promoting crypto assets.
Last month, the FCA also published detailed guidelines for crypto firms to ensure compliance when promoting crypto assets.
More Crypto Businesses Shifting Overseas
With the FCA tightening its oversight of crypto firms, more new businesses and startups are moving to countries with friendlier regulatory environments for cryptocurrencies.
Many entrepreneurs prefer Singapore, which offers better protection and faster registration for crypto companies.
According to data from Crunchbase, over 900 blockchain companies are registered in Singapore, compared to only 44 in the UK that have met the FCA’s Anti-Money Laundering (AML) requirements.
