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3 min read
The Financial Conduct Authority (FCA) has opened a consultation on updated guidance for its Financial Crime Guide, providing crypto businesses with a detailed outline of the supervisory controls expected under the UK’s expanding regulatory regime. The consultation, which began on October 23, proposes changes covering cryptoassets alongside fraud, sanctions, data security, and money laundering. Responses are due by December 24.
Supervisory Expectations And Controls
The proposals apply to the FCA’s financial crime supervisory population, which includes cryptoasset businesses and firms overseen under the Money Laundering Regulations. The consultation paper focuses on how firms assess customers and transactions, and how they respond when risk profiles change. It proposes examples of good and poor practice for enhanced due diligence, onboarding, and transaction monitoring.
A central element of the guidance addresses the use of blockchain analytics. The FCA notes that while a blockchain record can assist in an investigation, the record alone does not determine whether a customer’s explanation is credible or whether a specific transfer requires further scrutiny. The guidance emphasizes that analytics must function within a broader working control system rather than operating as a standalone solution.
For exchanges and custody providers, the consultation indicates that purchasing a screening product is only one component of compliance. Firms must still set thresholds, review alerts, and document decisions. The FCA states that a technically accurate warning is of limited utility if it remains unreviewed while funds are transferred elsewhere. This applies to stablecoin transfers as well as volatile tokens, as a stable unit price does not establish the identity of a sender or the origin of funds.
Travel Rule And Governance Requirements
The consultation paper provides further guidance on the Travel Rule, which concerns the information accompanying certain transfers. It also addresses governance, noting that internal structures must evolve as businesses grow. Proposed changes include a review of whether policies and staff training adequately distinguish between obligations under proceeds-of-crime legislation and those under terrorism legislation.
The FCA clarifies that the guide contains no new rules and imposes no new requirements. Its purpose is to help firms understand supervisory expectations and assess their own arrangements. The distinction between transaction risk and market risk is highlighted, with the FCA stating that control systems need to reflect this difference.
Timeline And Regulatory Context
The consultation closes on December 24. Following the close of the consultation, the FCA plans to publish feedback and the final text in a policy statement. The regulator’s regime overview states that the wider cryptoasset framework is expected to begin on October 25, 2027. Applications for authorization are already open, and the FCA published a package of final rules in June.
The FCA notes that this consultation does not postpone existing anti-money-laundering duties until next year, nor does it bring the entire future regime into force immediately. It serves to fill in the proposed guidance that firms can use when translating their obligations into day-to-day decisions.
Frequently Asked Questions
When does the FCA consultation on the Financial Crime Guide close?
The consultation closes on December 24. The FCA plans to publish feedback and the final text in a policy statement after the consultation period ends.
Does the new Financial Crime Guide impose new legal requirements on crypto firms?
No. The FCA states that the guide contains no rules and imposes no new requirements. It is intended to help firms understand supervisory expectations and assess their own arrangements.
