To ask the Chancellor of the Exchequer, what assessment he has made of the appropriateness of the Financial Conduct Authority remaining the supervisor of the cryptoasset sector due to the time taken to manage the anti-money laundering / counter terrorist financing registration of cryptoasset businesses.
18 June 2021
The Government is committed to retaining the UK’s global leadership position in fintech by creating a regulatory environment which promotes innovation whilst maintaining the highest regulatory standards, including for anti-money and counter-terrorist financing. Having an effective anti-money laundering and counter-terrorist financing regime underpins the competitiveness of British financial services firms and the UK as a whole, by providing confidence that our financial system is clean and safe, and that new technologies can be used both reliably and safely.
Any steps taken in light of the consultation on the Government’s regulatory approach to cryptoassets will aim to balance the potential risk to consumers with the ambition to foster competition and innovation in the sector.
In order to properly assess whether a cryptoasset firm meets the requirements for registration set out in the Money Laundering Regulations, the FCA are required to assess whether a firm and its officers, managers or beneficial owners are “fit and proper” with regard to the risk of money laundering or terrorist financing. The FCA are therefore assessing firms’ business models holistically, and it has been necessary, in many cases, for them to request additional information from the applicant firm. A significant reason for this has been that many applications have contained insufficient information on their business mode and evidence to demonstrate that the firm meets the required standard. The application process for cryptoasset firms has therefore taken longer than originally anticipated.
The mean length of time in days that a cryptoasset firm has had their application for registration under review by the FCA is 248 days. The median length of time in days that a company has had their application for registration under review is 252 days. The maximum length of time in days that a company has had their application for registration under review is 527 days.
The Government believes that the FCA’s expertise in the regulation of financial products, its membership of the Cryptoasset Taskforce, and its experience as anti-money laundering supervisor for other asset-based financial services firms makes it the right supervisor for the cryptoasset sector. As a result of the longer than anticipated time being taken to process applications, I can confirm that the FCA has increased considerably the resources allocated to assessing applications.