G7’s Financial Action Task Force Tells UK to Regulate Cryotocurrency

The Financial Action Task Force, an international research organisation focused on money laundering and terrorism financing, has reviewed the defences of the United Kingdom. It finds that the cryptocurrency sector is a gaping hole in the UK’s defence mechanisms.
7,900 investigations
The FATF, or Groupe d’action financière, is an organisation formed in 1989 by the G7 to conduct research on the subject of money-laundering. Terrorism financing was added to its areas of interest after the 11th of September 2001. It has 37 member countries and also maintains a list of .
It has been working on the cryptocurrency problem since February 2018, and to have international guidelines sort out by June 2019. The G20 has committed to following whatever it comes up with.
Generally, the report finds the UK amongst the best in the world at monitoring for the two kinds of financial crime with which it is concerned. The country has a “robust understanding” of monitoring and preventative measures, having conducted 7,900 investigations, 2,000 prosecutions and 1,400 convictions over the last year. In terms of terrorism financing, the UK has “been a leader” by taking such measures as freezing the assets of suspects.
However, the FATF criticised the fact that the UK has limited the powers of its Financial Intelligence Unit, and its while data is being effectively harvested, suspicious activity reporting needs a “significant overhaul”.
An emerging risk
In terms of the money laundering/terrorism financing risks presented by the cryptocurrency trade, the report finds that the UK has not made little consideration. At the same time however the report classifies the risk is only an “emerging” one (“there is not yet evidence to suggest that broad scale ML/TF is occurring in the UK through this relatively small sector”), and adds that the country is aware of the shortcoming.
Says the report: “The UK acknowledges the inherent vulnerabilities associated with the anonymity of VCs [virtual currencies], and while the risk of ML/TF in this area is assessed as low, the UK acknowledges that there are intelligence gaps and VCs are being used in illicit activity (particularly in online marketplaces for the sale and purchase of illicit goods and services). As a result, the UK intends to regulate virtual currency exchange providers under its implementation of the EU’s fifth Anti-Money Laundering Directive.”
The FATF recommends that the UK extend its laws to cover these entities.
The UK has made few moves to regulate cryptocurrency, an attitude which has prompted local blockchain businesses to and campaign for some attention. The Financial Conduct Authority, the country’s financial regulator, set up a ‘crypto-assets task force’ in March 2018, which is to publish recommendations in early 2019.
At the end of November, the FCA reported having  50 cryptocurrency-related companies in 2018. It also recently revealed a rather languid attitude towards revising existing law – an official told Reuters that the authority will decide by the end of 2018 if the “grey edges” of the “perimeter of regulation” should be clarified, and then discuss, at an unspecified date in the future, whether this perimeter should be altered.