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Crypto firms feel bite of UK financial crime watchdog

Crypto firms struggle to meet anti-money-laundering standards, says UK watchdog, while EU’s Joint Public Prosecution Service aims to come down hard on financial crime in member states and the UAE launches ultimate beneficiary declaration campaign to combat financial crime.

Napier AI
June 4, 2021

UK’s Financial Conduct Authority enforces anti-money laundering rules on crypto sector

The UK financial watchdog, the Financial Conduct Authority (FCA), said on Thursday that many crypto asset trading firms in the fledgling sector are not yet compliant with the amended Money Laundering, Terrorist Financing and Transfer of Funds Regulations (MLRs) of 2017.

The FCA lists just five crypto asset firms for clear MLR compliance. The regulatory body’s Temporary Registration Regime currently allows 89 firms to trade while the suitability of their applications is assessed. A further 51 firms withdrew their applications and may not trade.

We saw in last week’s blog how the twelve-year-old sector is under pressure from regulators globally across a range of concerns. In January, European Central Bank (ECB) President Christine Lagarde called for global regulation of Bitcoin’s “funny business”, citing its potential for financial crime.

Regulators have noted generally improved sector compliance in combating money laundering and terrorist financing. However, illicit use of crypto remains a problem. The FCA meanwhile granted an extension of temporary registration to existing crypto asset firms until 31 March 2022.

Read more on this story at Reuters.

EU Public Prosecutor’s Office gets ready to up the ante in fight against Europe’s money-launderers and financial criminals    

The European Public Prosecutor’s Office (EPPO), founded in 2017, will officially start  business on 1 June, with the aim to come down hard on criminals and make sure no euro is wasted on corruption or fraud.

New EPPO head, Romanian prosecutor Laura Kövesi, minced no words as she outlined the coming fight against financial crime for the Europe-wide entity, saying, “Our target is economic and financial criminality. Make no mistake, this is the most common threat to any democratic society. It is underreported, under-estimated, often even tolerated to the benefit of organized criminal organizations that aspire to subvert and replace legitimate authorities.”

The EPPO was founded with the aim of investigating and prosecuting cross border VAT fraud, money laundering, corruption, and misappropriation in relation to EU budget funds.

Both European Commissioner for Justice, Didier Reynders, and Vice President of the European Commission for Values and Transparency, Věra Jourová, praised the launch. They cited the context of the EU’s unprecedented financial recovery package aimed at rebuilding the continent’s economies in the wake of the Coronavirus pandemic.  

22 of the 27 EU member states have each contributed a prosecutor to the EPPO’s Luxembourg headquarters. The team will cooperate with other EU agencies, and the responsible bodies of non-participating member states. It is expected that this united front against financial crime will eventually conduct about 3000 investigations per year .

Read more on this story at the OCCRP.

UAE’s new ultimate beneficiary laws expand net to include non-financial businesses

The UAE’s Ministry of Economy announced the campaign on Sunday.

According to Director of the UAE ministry’s recently founded anti-money-laundering department, Safeya Al Safi, declaring any organisation’s ultimate beneficiary is “one of the main requirements for completing disclosure and transparency requirements from enterprises and individuals within the anti-money laundering system in the country.”

In recent years, the UAE has enacted various regulations aimed at curbing money-laundering, financing of terrorism and other serious financial crimes, which are built on the foundations of a tight anti-money laundering system.

Registering and declaring beneficial ownership is now mandatory for designated non-financial businesses and professionals (DNFBPs).

The campaign sounds a warning to money launderers and other bad actors, following February’s launch of the Executive Office of Anti-Money Laundering and Counter Terrorism Financing, which its Director General, Hamid Al Zaabi, described as being tasked to “actively pursue those who abuse [the UAE’s financial system] for illicit means.”

The Ministry of Economy’s anti-money laundering department intends to register over 500 thousand DNFBPs by the end of the campaign on 30 June. Entities not submitting the required information by this date risk heavy fines.

Read more on this story at The National News.

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