UK cryptoasset businesses have been required to comply with requirements of the UK Money Laundering Regulations (MLR) since January 10, 2020, and had to register with the FCA by January 10, 2021. (EU cryptoasset businesses also became subject in January 2020 to applicable anti-money laundering laws under member state implementation of the 5th EU Anti-Money Laundering Directive).
Cryptoasset businesses which had applied for registration with the Financial Conduct Authority (FCA) before December 15, 2020 were allowed to continue operating under a temporary registration regime (TRR) until July 9, 2021. The FCA has announced that it is extending the TRR until March 31, 2022 to allow existing cryptoasset businesses to continue trading while the FCA reviewed the registration applications.
In its announcement however, the FCA noted that a large number of firms had withdrawn their applications for registration as a result of not meeting MLR requirements. The announcement notes that, while AML controls are "not the only element that the FCA will assess in relation to an applicant, the FCA will only register firms where it is confident that processes are in place to identify and prevent this activity."
According to the FCA register, only five cryptoasset businesses were authorised to operate in the UK with another 90 operating under temporary registration. Firms that do not meet registration requirements will have to cease trading and return assets to consumers.
A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations. This has resulted in an unprecedented number of businesses withdrawing their applications. The extended date allows cryptoasset firms to continue to carry on business while the FCA continues with its robust assessment.