UK Regulators Give Firms Crypto Sanction Warning

March 14, 2022
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The UK’s Financial Conduct Authority, Office for Financial Sanctions Implementation and the Bank of England have made a call for crypto firms to adhere to the financial sanctions against Russia, following speculation that crypto-assets could be used as a way around compliance rules.

The UK’s Financial Conduct Authority (FCA), Office for Financial Sanctions Implementation and the Bank of England have made a call for crypto firms to adhere to the financial sanctions against Russia, following speculation that crypto-assets could be used as a way around compliance rules.

Financial sanctions regulations do not differentiate between crypto-assets and other forms of assets, a joint statement made by the UK’s financial watchdogs has said.

The statement comes after concerns from governments that economic and trade sanctions could be undermined by what is still a relatively unregulated product in the EU, UK and US. The EU made a similar statement last week when it unveiled its latest set of sanctions.

Previously, a senior official in the Ukrainian government, Mykhailo Fedorov, called on crypto exchanges to block all Russian and Belarusian accounts.

However, a blanket ban of Russian users has so far been resisted by the world’s largest crypto exchanges, including Binance, Coinbase and Kraken.

Coinbase, however, confirmed in a blog post that it has blocked 25,000 addresses related to Russian individuals or entities that it believes are involved in illicit activities.

The UK’s regulators have warned that the use of crypto-assets to circumvent economic sanctions is a criminal offence under the Money Laundering Regulations 2017 and regulations made under the Sanctions and Anti-Money Laundering Act 2018.

“The UK financial regulatory authorities reiterate that all UK financial services firms, including the crypto-asset sector, are expected to play their part in ensuring that sanctions are complied with,” the statement reads, adding that where transactions give rise to concerns about sanctions evasion or money laundering, firms should be considering their obligations to report to the UK’s Financial Intelligence Unit, which is based at the National Crime Agency.

The regulators said that they remind all other authorised financial institutions to check the FCA’s crypto firm register to identify whether any crypto-asset firms that they do business with are registered.

Otherwise, they should check the equivalent register of the jurisdiction in which the crypto-asset firm is based, the authorities recommend.

“Both the FCA and the Prudential Regulation Authority (PRA) will act if they see authorised financial institutions supporting crypto-asset firms operating in the UK illegally.”

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