Application for Cryptoassets business registration in UK under MLRs - Part II

Part II of the series

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Applicants should not submit generic/off-the-shelf policies and procedures that do not align with their business model or that contain obsolete documents not designed for or adapted to the proposed cryptoasset activities.

The applicant should demonstrate that it has effective transaction monitoring and blockchain analysis with sufficient compliance resources, skilled to carry out alert and escalation, adequate for its size and business complexity, this includes both fiat and cryptoasset transactions (where appropriate).

An application where the applicant relies solely on group policies and procedures, but is unable to demonstrate clearly how to apply them to the applicant’s business model and proposed cryptoassets activities is unlikely to be successful.

Failure to submit policies around outsourcing and the service level agreements or demonstrate sufficient oversight of the outsourced activities with appropriate assurance test on the outsourced activities will unlikely provide complete information regarding its outsourcing arrangements.

The applicant must be able to evidence staff training material tailored to its particular business model and associated AML/CTF/PF risks along with its annual training plan. An inadequate or lack of resources to deliver training on a regular basis to all staff including new joiners will be grounds for not approving the application.

The FCA expects the SAR policy of the applicant to highlight a clear route of escalation internally to the MLRO/Nominated Officer as well as externally to the National Crime Agency (NCA). It should also reference within the SAR policy to tipping off and the circumstances where the applicant firm may need to consider a Defence Against Money Laundering (DAML) SAR.

The FCA will not approve an application where the sanctions policy is generic and where there are no procedures to ensure that it is kept up to date with changes to the sanctions regime. There should be provision in placed to identify transactions linked to higher risk wallet addresses that may be associated with a sanctioned entity, a customer transacting from a sanctioned jurisdiction or a procedure on how to deal with the funds of a designated person.

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