An update from our financial services team in conjunction with The MPAC Group.
The Financial Conduct Authority (FCA), in its new role as the anti-money laundering and counter terrorist financing supervisor for cryptoasset businesses, has released its consultation paper Recovery of costs of supervising cryptoasset businesses under the proposed anti-money laundering regulations: fees proposals. Under these proposals, crypto businesses will need to be registered with the FCA by 10 January 2020.
While this is still at the consultation stage, if you’re involved with cryptocurrency then it’s important to understand how this is likely to affect you and where you can find help with the registration process.
Which businesses will be affected?
Any firm involved in any way in any sort of crypto-related activity, including:
- Cryptoasset exchange providers
- Wallet providers
- Initial coin offerings
An up-to-date list can be found here on the FCA’s website.
Existing authorised crypto companies, be they electronic money providers or securities firms, need to be additionally registered.
If my business is affected, what action do I need to take?
If you are currently carrying on any crypto activities, then, assuming you get your application for registration in prior to 10 January, you can continue on a transitional arrangement for a year. During that year, you must submit your full application for registration.
If you are preparing to transact in crypto after 10 January, you have to be preregistered before you start those activities.
How do I register?
The FCA has yet to fully confirm the application process. But we understand that requirements will include:
- A financial crime policy showing how financial crime will be deterred, detected and reported within the firm
- Procedures regarding client take on
- How sanctions/PEP checks are conducted
- What systems are used to check the origin of any cryptoasset and how transactions are monitored for financial crime
How much does it cost?
The FCA is charging an upfront of fee of £5,000 payable on submission of the application. This figure is part of their current consultation, which you can respond to here until 11 November.
Annual fees proposed by the FCA are based on annual income derived from crypto activities. and are expected to be minimum of £1,000.
What if I am already authorised as a securities or EMI/PSD firm? Do I need to be additionally registered?
The FCA consultation period, as currently written, requires you to apply for additional registration (with no apparent discount on the fee). However, this may change once consultation answers are in.
What are the key dates?
- Responses to the consultation paper on the fees they propose must be in by 11 November
- Responses to the annual fes charged on all crypto gross income must be in by 10 December
- All crypto firms that are currently trading must be compliant with the MLRs by 10 January 2020 and must register within one year
- All crypto firms that want to start trading after 10 January 2020 must be registered before they start operating. In other words, you need be registered before launch
If you would like guidance with the registration process, please get in touch with your usual BKL contact or use our enquiry form. We would be pleased to put you in touch with The MPAC Group, a highly experienced team of corporate compliance and regulatory advisers who have worked with BKL for several years.
MPAC’s expertise includes cryptoassets. They can assist you with:
- Becoming compliant with the regulations (providing tailored policies, procedures for the applicable areas of your business plus access to various technology solutions)
- Submitting your firm’s registration to the FCA and managing it through the process
- Calculating your firm’s fee amounts correctly
- Post registration support and monitoring