UK, EU, and FCA Crypto AML Requirements

UK and EU AML requirements establish the framework firms must follow to identify, assess, and manage money laundering, terrorist financing, proliferation financing and broader financial crime risks. Requirements typically cover customer due diligence, transaction monitoring, sanctions compliance, suspicious activity reporting, risk assessments, and governance oversight. 

Yes. Cryptoasset firms carrying on in-scope activities may be subject to AML obligations, including customer due diligence, transaction monitoring, sanctions screening, reporting, and financial crime governance. Regulatory expectations continue to evolve as digital and cryptoassets become more integrated into regulated financial markets. 

The FCA currently regulates certain cryptoasset activities, including firms registered under the Money Laundering Regulations.

The UK is moving toward a broader regulatory framework that is expected to bring additional cryptoasset activities within the FCA’s regulatory perimeter. As the regime develops, many cryptoasset firms are expected to require FCA authorisation and will be subject to broader regulatory obligations, including governance, conduct, prudential, and financial crime requirements.

The UK government has outlined plans for a broader cryptoasset regulatory regime. Depending on the activities undertaken, many firms may need to prepare for FCA authorisation and ongoing regulatory obligations as the framework develops. Firms should assess whether their governance, risk management, financial crime controls, and compliance frameworks are capable of meeting evolving FCA expectations.  

MLR registration primarily focuses on anti-money laundering controls and financial crime prevention. FCA authorisation is expected to involve broader requirements relating to governance, risk management, operational resilience, financial resources, market conduct, and ongoing regulatory oversight. 

Firms preparing for FCA cryptoasset authorisation are expected to face increased scrutiny of their AML and financial crime frameworks, including customer due diligence, transaction monitoring, sanctions screening, reporting, governance, and ongoing oversight. 

Controls will depend on a firm’s business model, customer base, and risk profile. Common areas of focus include customer due diligence, Know Your Customer (KYC) procedures, transaction monitoring, sanctions screening, suspicious activity reporting, and financial crime governance. For cryptoasset firms, additional controls may include blockchain transaction monitoring and Travel Rule compliance.

Cryptoasset businesses may face risks relating to sanctions exposure, fraud, money laundering, terrorist financing, cross-border transactions, and the movement of assets through decentralised or pseudonymous networks. Additional risks may arise from peer-to-peer transfers, self-hosted wallets, and the rapid movement of assets across jurisdictions. Firms are expected to identify, assess, and manage these risks through proportionate controls. 

The Travel Rule requires certain information about the sender and recipient of a cryptoasset transfer to be collected and shared between firms. It forms part of the financial crime framework applicable to many cryptoasset businesses and is intended to improve transparency and reduce illicit activity. 

The FCA increasingly expects firms to demonstrate effective governance, clear accountability, appropriate oversight, and evidence that financial crime controls operate effective. Firms should be able to demonstrate that senior management understand financial crime risks, receive appropriate management information, and oversee the effectiveness of AML and financial crime frameworks. 

AML frameworks should be reviewed regularly and whenever there are material changes to business activities, products, customers, jurisdictions, or regulatory requirements. Periodic independent testing can help assess whether controls remain effective. 

AML requirements can affect a broad range of organisations, including asset managers, investment advisers, broker-dealers, banks, payment firms, fintechs, cryptoasset businesses, and firms operating across multiple jurisdictions. 

Regulatory expectations continue to evolve across the UK, EU, and digital asset markets. Many firms are reassessing whether existing frameworks remain effective as financial crime risks, regulatory requirements, and business models become increasingly complex. 

AML requirements vary depending on a firm’s activities, customer base, and jurisdictions of operation. Firms may need to consider:  

• The UK Money Laundering Regulations (MLR) 

• The EU Anti-Money Laundering Regulation (AMLR) 

• Sanctions requirements and guidance issued by relevant regulators and authorities, including HM Treasury (HMT), the Cayman Islands Monetary Authority (CIMA) and the Commission de Surveillance du Secteur Financier (CSSF).  

Firms operating across multiple jurisdictions should ensure their financial crime frameworks are aligned with applicable local and international requirements. 

Firms should regularly review their financial crime risk assessments, governance arrangements, policies, procedures, and control frameworks to ensure they remain aligned with regulatory requirements and emerging risks.  

Contact us to discover how ACA supports firms with AML framework reviews, control enhancements, independent testing, and ongoing compliance support.