Digital Assets
FCA used money laundering regs powers on cryptos 45 times
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January 22, 2025
The UK’s Financial Conduct Authority (FCA) has used powers in the Money Laundering Regulations (MLRs) on registered crypto asset firms 45 times since 2020 as part of its supervisory work in the sector, according to a Freedom of Information Act (FOIA) response. The FCA register shows there are currently 46 registered crypto asset firms.
The regulatorʼs powers of direction in regulation 74C of the MLRs permits it to give a direction, specifically to a crypto asset business before, on or after registration, to remedy a failure to comply with the MLRs; to prevent a failure to comply or continued non-compliance; or to prevent the business from being used for money laundering or to finance terrorism.
“Forty-five is alarming and suggests that crypto firms are either not set up to comply or are showing a lack of regard/understanding of the regulations, either of which is alarming. However, this is not unusual with new or newly regulated markets,” said Fraser Mitchell, chief product officer at SmartSearch, a digital Know Your Customer (KYC) and compliance solutions company in the UK.
Directions imposed 2020-2024
2020: 1
2021: 24
2022: 12
2023: 4
2024: 4
Source: FCA FOI
Only 49 of 366 firms that have applied to be registered with the FCA under the MLRs since 2020 have succeeded. Three firms have been deregistered, according to FCA data.
The 74C power is similar to the requirement power under section 55L(3) of the Financial Services and Markets Act, according to the FCA. That power allows it to impose a new requirement, to vary a requirement, or to cancel such a requirement.
Essentially, 74C is like a voluntary requirement (VREQ) or an own initiative requirement (OIREQ), which the FCA uses to push firms to improve their risk management and compliance.
Strings attached
Cryptos, e-money, and payment services firms are frustrated they are not getting through the registration process. The FCA data indicates almost 70% are withdrawing applications, which indicates the FCA is saying it is minded to refuse them unless they withdraw and reapply, said Simran Bharaj, a financial crime risk management expert at GKSB Consultancy.
“It’s always been the case that you can approve a firm subject to restrictions. Apparently, [the FCA is] doing that even more,” Bharaj said. “A lot of these firms have no trading history whatsoever, and theyʼre completely new to the market. It makes sense that there are restrictions imposed and that they must prove themselves before they are removed.”
Tough at the gateway
The FCA has been clear about its objective to ensure the firms it regulates or registers are the right kind of firms seeking to embed a culture of compliance.
Dee O’Sullivan, FCA interim head of department, retail and regulatory investigations, told an Association for Financial Markets in Europe (AFME) audience last year that the Authority was working hard with firms seeking regulation, on both the retail and wholesale sides. However, it was also taking a tough stance to “nip in the bud” any potential problems.