This August, the Financial Conduct Authority (FCA) in the UK published a consultation paper. The paper proposes to extend the scope of firms required to provide Annual Financial Crime Report (REP-CRIM) information. It should include firms that carry on regulated activities considered to potentially have higher money laundering risk, such as all crypto asset exchange providers and custodian wallet providers.
The current obligation to provide REP-CRIM information is based on:
- firm type (e.g. banks, building societies and mortgage lenders), and
- activity type and total revenue of £5 million or more (for example, intermediaries, e-money institutions and consumer credit firms).
What’s new in the proposal?
The extension in the consultation paper will be irrespective of a firm’s revenue threshold, but based on the nature of the regulated activity and the potential money laundering risks.
According to this criterion, crypto exchanges and custodian wallet firms are new categories of firms within the scope of the REP-CRIM obligation.
Additionally, additional firms would need to provide REP-CRIM information irrespective of their total annual revenue, such as all companies regulated by the Financial Services and Markets Authority (FSMA), electronic money institutions, payment institutions, multilateral Trading Facilities (MTFs), Organised Trading Facilities (OTFs) etc.
With this proposal, an approximate additional 4500 firms would report annually, including primarily the firms with total annual revenue below £5million per year and cryptoasset firms.
The paper has attached in Annex 4 a full list of firms in current scope and under the proposed extension.
What information to provide in the REP-CRIM obligation?
REP-CRIM information includes, amongst other things:
- the location of the firm’s customers
- the jurisdictions in which the firm has business
- which of those jurisdictions it considers high risk
- the resources that the firm allocates to tackling financial crime
- the number of suspicious activity reports it files with the National Crime Agency.
Timing of reporting
Firms are required to provide REP-CRIM information within 60 business days of the firm’s ‘accounting reference date’. The FCA proposed:
- All firms in scope except crypto firms, from their next accounting reference date 12 months after any FCA rules are made.
- Crypto firms, from their next accounting reference date after 10 January 2022. The different reporting start date is because crypto firms carrying on business before 10 January 2020 have until 10 January 2021 to register with the FCA.
Any firm can report earlier on a best endeavours basis, if they want to do so.
Consultation period
Comments on the Consultation Paper should be sent by 23 November 2020 using the form on FCA website: www.fca.org.uk/cp20-17-response-form.
The FCA plans to publish a Policy Statement (PS) with any final rules by Q1 2021.
Scorechain crypto risk & AML solution can help
In the paper, the FCA emphases that all firms, no matter whether they are required to provide REP-CRIM information, should continue to assess their systems and controls, including through assessments against relevant financial crime publications, to identify and manage money laundering risks, and to evidence the steps they have taken to manage that risk.
As a European leader in cryptocurrency transaction monitoring software for AML/CTF compliance, Scorechain Blockchain Analytics suite helps compliance teams in crypto firms to answer regulatory requirements and to implement a risk-based approach by saving cost and time.
Scorechain Blockchain Analytics provides the risk scoring for each crypto transaction/address/wallet with customisable parameters, which allow the users to identify and manage the ML risks by implementing their internal control policy. The real-time alert system gives the possibility of ongoing transaction monitoring and the reporting system helps them to fulfill their reporting obligations for suspicious activity. Last but not the least, the feature ‘Risk indicators’ helps users redflag suspicious activities at the level of entities/transaction behaviours and jurisdictions with more than 350 risk scenarios.
Want to know more about our crypto risk AML solution for your crypto business? Contact us at contact@scorechain.com
-------
Reference:
