MCBorrelli Advisors Limited (MCB)
Michael Borrelli: [email protected]
Mobile: +44(0)75 35994 132
Registered office address: 28 Minchenden Crescent, London, England, N14 7EL
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Money Laundering and Financial Crime
United Kingdom Legislation
- Outlines the applicable legislation governing the traceability of transfers of funds in the prevention, detection and investigation of money laundering and terrorist financing.
- Informs cryptoasset firms how legislation could apply to cryptoasset transfers
Wholesale Investment Firms
Clients’ Assets
- Outlines the applicable legislation governing the way in which investment firms hold assets (including cash) belonging to clients.
- Informs cryptoasset firms how legislation could apply with respect to providing custody services over clients’ assets and the environment in which they do not mix or mistake client assets with or for their own and to ensure that in the even of their insolvency, the clients are in the best possible position as against any other creditors.
FCA Regulated Activities and Investments
What Does the FCA Regulate?
The FCA is the main regulatory body in the United Kingdom for investment managers, advisors, dealer and the like. It regulates those, both people and corporate bodies, who carry on certain activities, known as regulated activities, in relation to certain type of investments, known as regulated investments.
Making an FCA Application
To carry on a regulated activity in the UK, a firm need to be authorised by the FCA under Part 4A of the Financial Services and Markets Act 2000 (FSMA). Those individuals within the firm which conduct certain activities will also need to be authorised by the FCA Each firm will fall into a particular category of business. These include categories for financial advice, wealth management; investment management, payment service institutions and FinTech or innovative business.
For this last category, the FCA has set up a direct support team which gives a dedicated contact for innovator businesses which are considering applying for authorisation and need support and also those which do not need to be authorised but could benefit from FCA support.
Regulatory and Financial Crime Compliance Risks – Opportunity Horizon
Complexity defines the existing domestic cryptoasset regulatory landscape.
One thing, though, is for certain, cryptoassets are not going anywhere!
Difficulty exists as firms must navigate a patchwork of differing approaches (e.g. due to the cultural, political and social differences). Compliance must remain ahead of the game as regulators bring cryptoassets under a regulatory aegis.
The Regulation of Cryptoasset Business
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017) are a wide-ranging set of regulations which form part of the UK’s AML and counter-terrorist financing (CTF) regime. Importantly for cryptoasset businesses, the MLRs 2017 apply to a wide range of businesses identified as most vulnerable to the risk of being used for money laundering and terrorist financing and this includes certain types of cryptoasset business. The FCA supervises a wide range of financial institutions under the MLRs 2017. While some are financial institutions carry on “regulated activities”, others are do not carry on regulated activities but are in scope. This includes businesses which carry on the activities of being a cryptoasset exchange provider and/or a custodian wallet provider. Details of these activities are provided below.
Compliance Risks – Don’t Risk It!
Risks are everywhere! A failure to spot these and deal with them can expose businesses to multiple
negative outcomes, especially in a changing and dynamic business environment.
At MCB, we commit to providing long-term, practical and tailored solutions to help our clients avoid the consequences associated with compliance risks. Your safety and security are paramount.
Non-Fungible Tokens – Compliance Compatibility
Understanding non-fungible tokens (NFTs) isn’t as easy as it’s made out.
NFTs are not easily exchangeable, both in terms of concept and substance. in an age of technological sophistication, it is extremely frustrating to have an asset with such revolutionary potential, yet a noted absence of clarity holds it back. They are the key to unlocking the doors to success.
Without knowledge of the compliance landscape, firms don’t stand to benefit from the lucrative commercial opportunities on offer. This
Fear not, we are on hand to help nudge you in the right direction.
The Regulation of Cryptoasset Business
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017) are a wide-ranging set of regulations which form part of the UK’s AML and counter-terrorist financing (CTF) regime. Importantly for cryptoasset businesses, the MLRs 2017 apply to a wide range of businesses identified as most vulnerable to the risk of being used for money laundering and terrorist financing and this includes certain types of cryptoasset business. The FCA supervises a wide range of financial institutions under the MLRs 2017. While some are financial institutions carry on “regulated activities”, others are do not carry on regulated activities but are in scope. This includes businesses which carry on the activities of being a cryptoasset exchange provider and/or a custodian wallet provider. Details of these activities are provided below.
Staking – Compliance Stakes
Staking has become a strategic revenue stream for firms operating in the cryptoasset sector in addition to their customers.
Providing or using a staking service, regardless of its materiality, does not come without certain drawbacks and obligations (e.g. tax compliance).
These must be subject to a comprehensive assessment to understand the associated compliance risks and identify what infrastructure should be implemented.
DLT PILOT SCHEME – COMPLIANCE TAKE OFF
Whilst there are many benefits for market infrastructures (“MIs”) (and firms they
support) using distributed ledger technology (“DLT”), such as the trading and
settlement of ‘tokenised’ securities, the applicable compliance requirements
under the forthcoming DLT Pilot scheme are both varied and complex.
It is safe to say that the compliance journey for financial services firms, which
lays out the path to safety, is ready for ‘take off’.