Key Takeaways
- The U.K. HM Treasury is considering higher AML and due diligence standards for its crypto industry.
- The proposals offer to reduce certain burdens on crypto firms and avoid wasting resources.
- Feedback and consultations on the draft proposal are open until Sept. 30, 2025.
The U.K. HM Treasury (HMT) has drafted a new proposal that seeks to close loopholes and risks within its current money laundering regulations, which includes the introduction of tougher requirements for local crypto firms.
Fit and Proper Crypto Rules
As per the draft proposal, the HMT intends to “deliver a more risk-based, proportionate regime” to tackle financial crimes but remain “workable” for the crypto sector.
More specifically, it explains that a previous consultation had highlighted weaknesses in areas such as pooled client accounts, crypto asset business regulation, trust registration, and “the practicalities of customer due diligence.”
HMT says it is “committed” to improving guidance on anti-money-laundering (AML) and counter-terrorism financing (CTF) efforts.
Notably, it’s proposing to lower the change-in-control notification threshold to 10%.
In short, this would require entities acquiring a 10% stake and/or major influence in another firm to notify the Financial Conduct Authority (FCA) for transparency purposes.
This expands the remit of the FCA’s “fit and proper” test, replacing the limited beneficial owner approach (25% threshold) with a broader test.
This may provide greater insight into a controller’s competence, integrity, and risk of financial crime, especially from overseas providers.
The HMT will be consulting on the draft until Sept. 30, with plans to finalize it for Parliamentary consideration next year, and it’s advised that U.K. crypto firms and industry participants provide feedback.
New Rules
For trusts linked to crypto firms, new rules could expand the types of trusts that are required to register with the nation’s Trust Registration Service to improve visibility, though reduce some provisions that HMT now views as unnecessary burdens.
The proposals also look to implement more diligent background checks on international banking partners, largely to avoid working with risky shell banks.
There’s also something to be said of customer due diligence.
At present, U.K. crypto firms apply enhanced checks on customers, but the new rules would see deeper checks on “unusually large” or complex transactions.
It says this change would not introduce a new obligation for firms, but instead refines an existing requirement.
HMT adds that this is so that firms can focus on compliance efforts and genuinely higher-risk transactions without expending resources on regular transactions.
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Eddie is a gaming and crypto writer at CCN. Covering the often weird and wonderful world of Web3 with an adoring, but skeptical eye.
Prior to CCN, Eddie has spent the past seven years working his way through the crypto, finance, and technology industry. He began with PR and journalism with Bitcoin PR Buzz and BitcoinNews.com, eventually working his way to become a copywriter with a dozen firms, including the likes of Polkadot before returning to journalism in 2023.
Having studied Radio production and journalism at University in the UK, Eddie spent a few years making podcasts and presenting on a local London radio station as he built up his writing chops.
A lifelong skateboarder, Eddie can often be found at the skatepark or touring the streets looking for something new to try. That, or kicking back playing JRPGs on his original PSP.
