Jurisdiction(s):
United Kingdom

UK AML Regulations 2019 and 5MLD: expanded cryptoasset definitions and compliance requirements for exchanges and wallet providers, including FCA registration and enforcement

Published on: 15 June 2020

Published by a LexisNexis Corporate Crime expert

Legal News

Article summary

Should compliant, ordinary individuals enjoy confidentiality over what they own? And does pushing that confidentiality into full anonymity heighten the chance of misuse by organised criminals and terrorist groups? The question of asset privacy is hotly disputed. Its position is unambiguous and forceful. The EU’s Fifth Money Laundering Directive (Directive (EU) 2018/843, known as 5MLD) plants its flag by aiming to dismantle the anonymity embedded in ownership frameworks: notably within certain trusts and corporate bodies. Unsurprisingly, the Directive also focuses on the anonymity surrounding cryptoassets, though the EU favours the label ‘virtual currencies’. It proposes to achieve this through the novel application of rules to crypto exchanges and custodian wallet providers offering services relating to cryptoassets, as such providers operate today.

Exchange providers—SI 2017/692, reg 14(A)(1) vs article 1(1)(c) of MLD5

Under the Money Laundering, Terrorist Financing and Transfer of Funds (information on the Payer) Regulations 2017, SI 2017/692 (Regulations), the term “exchange providers” encompasses businesses that exchange cryptoassets for money or for other cryptoassets, including by automated means (think ATMs), and whether acting as creator or as issuer. The UK government made plain in the Regulations’ explanatory memorandum that this wording is intended to catch initial coin offerings. Whereas...

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