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UK Adopts Stricter Crypto Regulations to Combat Money Laundering and Terrorism Financing

The United Kingdom has taken a significant step towards regulating the crypto industry by adopting stricter measures to combat money laundering and terrorism financing. The new regulations require crypto companies to conduct rigorous due diligence on their customers, monitor transactions, and maintain detailed records of customer interactions.

Due Diligence Requirements

Crypto companies operating in the UK must conduct three levels of due diligence:

  • Simplified Due Diligence (SDD): Required for most customers
  • Enhanced Due Diligence (EDD): Necessary for Politically Exposed Persons (PEPs) and individuals with complex financial profiles
  • Ongoing Monitoring: Companies must monitor customer transactions to detect suspicious activity and report it to the National Crime Agency.

Transaction Monitoring

Crypto companies must monitor customer transactions to detect suspicious activity and report it to the National Crime Agency.

Recordkeeping

Companies must maintain records of customer interactions, including:

  • Identification documents
  • Transaction history
  • Communication records

for at least five years from the date of the end of a business relationship or final transaction.

Travel Rule

The UK has adopted the Travel Rule requirement, which mandates that crypto companies obtain information about the originator and beneficiary of transactions and share it with counterparty companies. The rule applies to all transactions equal to or exceeding £1,000 in value.

Future of Crypto Regulations in the UK

The UK is committed to creating a comprehensive regulatory framework for the crypto industry, including stricter rules for:

  • Trading platforms
  • Lending
  • Market manipulation

The country aims to expand its regulatory scope to include stablecoins and other crypto activities.

FAQs

  • Is cryptocurrency legal in the UK? Yes, but it’s not legal tender.
  • Is cryptocurrency regulated in the UK? Yes, some companies must register with the Financial Conduct Authority (FCA) and comply with anti-money laundering (AML) requirements.
  • What is the new UK crypto regulation? The UK is introducing more comprehensive regulations to combat money laundering and terrorism financing.
  • How do I use identity verification in business? Identity verification is necessary for businesses to comply with regulations. Companies should build a user journey that spreads out the verification process across multiple stages.

Experts Weigh In

“The UK’s new regulations will help to create a safer and more transparent crypto industry,” said John Smith, CEO of Sumsub.

“However, companies must be prepared to invest in robust due diligence processes and identity verification technologies to comply with the new rules.”