What United Kingdom - The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (SI 2019/1511): Inclusion of Cryptoasset Exchange Providers and Custodian Wallet Providers Within the UK AML Regime; FCA as Supervisory Authority and Maintainer of the Cryptoasset Register requires
The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (SI 2019/1511) amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692, the 'MLR 2017') to bring UK cryptoasset businesses within the scope of the United Kingdom's AML/CFT regime, in implementation of the EU Fifth Anti-Money Laundering Directive's cryptoasset provisions. The 2019 SI inserts a new regulation 14A in the MLR 2017 defining 'cryptoasset exchange provider' (regulation 14A(1)) as a firm or sole practitioner who by way of business provides one or more of: (a) exchanging, or arranging or making arrangements with a view to the exchange of, cryptoassets for money or money for cryptoassets, (b) exchanging, or arranging or making arrangements with a view to the exchange of, one cryptoasset for another, or (c) operating a machine which utilises automated processes to exchange cryptoassets for money or money for cryptoassets, including where the firm or sole practitioner does so as creator or issuer of any of the cryptoassets involved. 'Custodian wallet provider' (regulation 14A(2)) means a firm or sole practitioner who by way of business provides services to safeguard, or to safeguard and administer, (a) cryptoassets on behalf of its customers, or (b) private cryptographic keys on behalf of its customers in order to hold, store and transfer cryptoassets. 'Cryptoasset' is defined as 'a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored or traded electronically'. The SI amends regulation 7(1) (supervisory authorities) to add cryptoasset exchange providers and custodian wallet providers as categories of relevant person under Financial Conduct Authority (FCA) supervision; amends regulation 54 to require the FCA to maintain a register of cryptoasset exchange providers and custodian wallet providers (new regulation 54(1A)); amends regulation 56 (requirement to be registered) to add cryptoasset exchange provider and custodian wallet provider to the registration-required list; and inserts a new regulation 56A providing a transitional provision for existing cryptoasset businesses. The SI also extends customer due diligence obligations: a cryptoasset exchange provider operating a machine which utilises automated processes must apply CDD measures in relation to each transaction carried out using that machine (new regulation 27(7D) in the MLR 2017). The 2019 SI is the foundational instrument that brought UK crypto exchanges and custodian wallet providers into the FCA's AML registration regime; non-registration with the FCA where required is a criminal offence under MLR 2017 regulation 56.
Pillar: Crypto & Sovereign Finance · Authority: Parliament of the United Kingdom (statutory instrument made by HM Treasury under powers in section 49 of the Sanctions and Anti-Money Laundering Act 2018 and in implementation of EU 5AMLD); supervision and enforcement by the Financial Conduct Authority (FCA) for cryptoasset exchange providers and custodian wallet providers under amended regulation 7(1) of the MLR 2017 · Version: 1.0.0 · Last updated:
Primary source: https://www.legislation.gov.uk/uksi/2019/1511/made
SHA-256 integrity: 068f7e42541f8c56470a129467c3b7043aea059399e95942eb0640b5afb2b6c2
Primary Citations — 16 traced to source
- The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (United Kingdom Statutory Instrument 2019 No. 1511), as published on legislation.gov.uk
- SI 2019/1511, regulation 6 - inserts new regulation 14A into the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692)
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