The FCA has brought the first criminal charges against an individual for alleged offences of running multiple crypto ATMs without FCA registration.
This marks the first attempted FCA prosecution against an individual relating to unregistered cryptoasset activity under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
Background
The FCA has charged the individual with running multiple crypto ATMs without FCA registration. Specifically, the individual is charged with running the crypto ATMs between 29 December 2021 and 8 September 2023 without the required registration.
A crypto ATM is an ATM, where crypto can be exchanged for cash and vice versa. This obviously offers the potential for money laundering, hence the FCA registration and supervision requirements.
What are the FCA registration requirements?
As we have explained in previous articles, UK anti-money laundering ("AML") regulations can apply to UK crypto firms that provide exchange or custodian services for cryptoassets (e.g. a crypto ATM).
This is done on the basis that the UK Government has transposed AML requirements relating to cryptoassets into national law.
In summary, UK business providing the services of exchange and/or custody of a cryptoasset will be subject to the AML regulations. The AML regulations appoint the FCA as the supervisor of cryptoasset businesses for AML purposes, and a business in scope will need to register with the FCA as well as to comply with all regulatory requirements.
New powers for the seizure and recovery of cryptoassets
On 20 June 2024, we discussed how the FCA and London police arrested two people in connection with an alleged illegal cryptocurrency exchange platform worth more than £1 billion. The arrest followed searches of two properties.
We noted how the arrests came at a time when the UK authorities had just been granted new powers in relation to the seizure and confiscation of cryptoassets. However, it is unclear whether these powers were indeed used.
We have detailed these new powers in a previous article: Can UK law enforcement seize cryptoassets? – Gherson LLP
This is not the only significant event that has happened this year in terms of investigating crime relating to cryptoassets. On 20 March 2024, it was reported that the Crown Prosecution Service ("CPS") had obtained the conviction of an individual for offences relating to money laundering. This followed the largest seizure by UK authorities of the cryptocurrency bitcoin.
Criminal investigations and litigation
Gherson Solicitors criminal litigation, regulatory and investigatory team combine an expert knowledge of criminal and regulatory law underpinned by a firm understanding of digital assets and blockchain technology. As such, the team is able to provide expert strategic advice to anyone wanting to investigate and pursue a potential theft of crypto assets.
The team is also able to provide tailored advice to anyone facing investigation on allegations of criminality involving cryptoassets.
Regulation and compliance
In these constantly changing times, firms that either deal with cryptoassets themselves or have exposure to firms operating this type of an asset, will need to carefully consider all their systems and controls to ensure that they are able to comply with all relevant AML and sanctions regulations. Gherson's criminal litigation, regulatory and investigatory team is able to provide advice and assistance with AML and sanctions compliance, including in situations involving cryptoassets.
Additionally, the team has recently started a series of blogs on the regulation of crypto, with the aim of advising those who work in the compliance of this sector. For those who would like advice on the relevant issues, including those who have had issues with the FCA registration process, our specialist regulatory and compliance team can guide individuals and companies through the process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
