UK Crypto Exchanges Pose Low Money Laundering Risk
Cryptocurrency exchanges in the U.K. present a “low risk” for money laundering and terrorist financing activities, according to a report published last week by the Financial Action Task Force (FATF), a global anti-money laundering policymaker.
The report states that while such activities are an “emerging risk,” there is not enough evidence yet to suggest that they are occurring through crypto exchanges.
The regulator, however, has asked the U.K. authorities to work on a plan to extend anti-money laundering and counter financing of terrorism rules in the crypto sector, as well as elsewhere, in order to tackle any potential risks.
FATF asks the U.K. to:
“Continue to develop an understanding of emerging risks (such as virtual currencies) and intelligence gaps, and take appropriate action.”
The U.K. has acknowledged that there are “inherent vulnerabilities” associated with the anonymity of digital currencies, the report says.
As a result, the nation is planning to regulate cryptocurrency exchanges under its implementation of the EU’s fifth Anti-Money Laundering Directive and monitor exchange services between cryptocurrencies and fiat, as well as wallet providers.
The report arrives in the build-up period before FATF issues guidance for global cryptocurrency regulation, expected by June 2019. The guidance will set out how nations should govern crypto exchanges, companies offering initial coin offerings (ICOs) and digital wallet providers.
That initiative comes in response to leaders from the G20 nations who had called for international coordination on the issue and last week reiterated their pledge to regulate crypto-assets.
“We will regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF standards and we will consider other responses as needed,” they stated.
The U.S. Treasury’s Office of Terrorism and Financial Intelligence also called on the international community earlier this year for stronger cryptocurrency regulations.