The FCA Has Begun a Raid on Illegal Cryptocurrency ATMs
- There are currently no registered cryptocurrency ATMs with the FCA. This means crypto ATMs functioning in the UK are illegal.
- Although the FCA does not regulate crypto assets, it does demand that all businesses that deal in cryptocurrencies register and demonstrate they have strong anti-money laundering and counterterrorism financing measures.
- Regulators in the UK have imposed tougher guidelines for companies that promote cryptocurrency products there.
The United Kingdom commenced its first official raid against illegal crypto ATMs operating in the country. On February 14, news emerged that the UK’s Financial Conduct Authority (FCA) had inspected several sites around Leeds that are believed to host several illegal crypto ATMs.
Authorities gathered evidence from their search around the city that different illegal machines allowed customers to buy or convert fiat currencies into cryptocurrencies such as Bitcoin. The FCA collaborated with local police such as the West Yorkshire police force’s digital intelligence and investigation unit in its raid.
Sharing more details about the investigation, the FCA’s executive director of enforcement and market oversight, Mark Steward, said,
Crypto businesses operating in the UK need to be registered with the FCA for anti-money laundering purposes. However, crypto products themselves are currently unregulated and high-risk, and you should be prepared to lose all your money if you invest in them.
According to the release, the FCA will analyze the information gathered during these investigations and will consider additional enforcement. Detective Sergeant Lindsay Brants said the machines’ operators were given “warning letters” urging them to “cease and desist using the machines” and that “any breach of regulations would result in an investigation under money-laundering regulations.”
The FCA reportedly contacted all hosts and operators in March 2022 to inform them of the legal consequences of operating crypto ATMs without FCA permission. Although there isn’t a particular law prohibiting cryptocurrency ATMs in the UK, none have received FCA approval as of this article.
The connections between cryptocurrency ATMs and money laundering are anything but speculative, and international attention has been drawn to possible connections between these ATMs and organized crime. According to a 2020 research by the U.S. Drug Enforcement Agency (DEA), transnational criminal groups are using crypto ATMs in addition to more standard approaches to launder money from the sale of illicit drugs.
Like the rest of the world, the UK appears to be aiming to implement considerably stricter crypto policies nationwide. So, the raid against illegal ATMs is just one of its recent actions in that direction.
In a consultation paper published earlier this month, the UK Treasury highlighted new regulations that might result in more stringent standards for crypto companies doing business in the UK. These regulations would be more in line with those for traditional financial services.
Additionally, organizations interested in marketing cryptocurrency products in the UK will soon require FCA approval. According to a recent announcement, businesses who choose not to use any of the required methods of marketing cryptocurrency risk receiving a criminal sentence of up to two years.
I have covered some exciting stories in my career as a journalist and find blockchain-related stories very intriguing. I believe Web3 will change the world and want everyone to be a part of it.
