UK Government Report Says Crypto was Major Money Laundering Risk in 2022-2023

May 2, 2024

Crypto-assets have been singled out as a key conduit for money laundering activities between 2022 and 2023 by the U.K. Treasury. 

The revelation stems from an analysis published Wednesday based on data furnished by the Financial Conduct Authority (FCA), spotlighting critical vulnerabilities within the cryptocurrency sector.

Crypto Firms Under Scrutiny

The U.K. government’s financial arm underscored that crypto firms, alongside retail banking, wholesale banking, and wealth management, stand at the forefront of susceptibility to exploitation for money laundering endeavors during the aforementioned period. This conclusion was drawn following the FCA’s meticulous risk assessments conducted on 238 firms.

While the FCA has been diligently ensuring that crypto entities register with the regulatory body and adhere to stringent anti-money laundering regulations since 2020, the persistent vulnerability of the crypto industry to illicit activities remains a pressing concern.

Combating Crypto-Related Crime

In a concerted effort to combat the rising tide of crypto-related crime, U.K. law enforcement authorities have undertaken significant measures. Notably, in October 2022, the deployment of crypto tactical advisors across the nation bolstered efforts to seize digital assets associated with criminal undertakings, resulting in the confiscation of hundreds of millions worth of crypto.

The newly unveiled report further disclosed that “In 2022-23 there was the equivalent of 52.8 (sic) full-time financial crime specialist employees dedicated to AML/CTF supervision at the FCA, with 15.8 of these dedicated to the supervision of crypto-asset businesses.”

Additionally, broader supervisory teams beyond the specialized financial crime units initiated 95 cases pertinent to crypto-assets during the reporting period.

As the crypto landscape continues to undergo rapid evolution, regulatory bodies worldwide are confronted with the formidable task of striking a delicate balance between innovation and security. Effectively reconciling these imperatives is paramount to thwarting money laundering and other financial malfeasance, while concurrently nurturing a resilient and dynamic digital asset ecosystem.

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