FCA warns of illegal Crypto ATM’s operating in the UK
Posted on 29 Mar 2022
The FCA has issued a warning this week of the illegal operation of crypto ATMs (CATMs) in the UK.
Although the operation of a CATM is specified as a permissible activity during the registration process under 5MLD, the FCA has taken a strict approach in their authorisation and has yet to permit a firm to conduct this activity.
Consequently, CATMs currently operating in the UK are doing so outside the scope of UK financial service regulation, prompting the FCA to issue a warning to consumers to avoid accessing their services.
Operators of CATMs can expect contact by the regulatory authority addressing their illegal activity and will risk further actions if they fail to discontinue operations until authorisation has been permitted.
The FCA’s strict approach to the authorisation of CATMs was evidenced last month, when the Upper Tribunal upheld the FCA’s rejection for authorisation of the ATM service provider Gidiplus, who had appealed the decision.
In coming to this decision, the judge echoed concerns in the deficiencies of numerous aspects of the firms AML controls and in the fitness and propriety of the owner and compliance officer, Mr Osunkoya, who in 2018 was investigated by police for the circumvention of Bank’s systems and controls in relation to his CATM business.
This warning continues the FCA’s rhetoric of concern regarding the risks posed by crypto assets, which last month included a publication addressing their potential to circumvent sanctions imposed on Russian and Belarus.
Additionally, regulated firms with exposures to crypto-assets have been reminded of their regulatory obligations, including being clear with customers, assessing their risk, and having appropriate systems and controls in place to counter the use of crypto-assets for financial crime.