On 10 September 2024, the Financial Conduct Authority (FCA) published an announcement that it had charged Mr Olumide Osunkoya, with the unlawful operation of multiple cryptoasset ATMs without FCA registration. The charges followed a recent operation between the FCA and law enforcement agencies to tackle the operation of illegal cryptoasset ATMs.
This is the first time the FCA has brought criminal charges in relation to unregistered cryptoasset activity under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) and are the first charges against an operator of cryptoasset ATMs in the UK.
There are no cryptoasset ATM providers registered under the MLRs to legally provide cryptoasset ATM services in the UK.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, stated "If you're using a crypto ATM, you are handing your money directly to criminals. Criminals can exploit crypto ATMs to launder money globally."
Comment
The recent operation between the FCA and law enforcement agencies, Therese Chambers' comments and the criminal charges against Mr Osunkoya highlight the FCA's proactive approach to dealing with the perceived anti-money laundering and counter-terrorist financing (AML/CTF) risks arising in relation to cryptoasset businesses.
The FCA has specifically called out applications for registration of cryptoasset businesses as a "particular issue", where they are receiving incomplete and poor-quality applications. The latest registration statistics show that, as of September 2024, only 4 (or 13%) of cryptoasset business applications in the previous 12 months were successful in obtaining registration under the MLRs. Since January 2020, only 14% of all cryptoasset business applications have been successful.
These statistics reinforce that the FCA's concerns with risks relating to cryptoasset businesses are a sector wide issue and are not focused solely on cryptoasset ATMs. As such, all cryptoasset businesses should ensure that they are aware of how the MLRs may apply to them, and that they are operating in compliance with the MLRs if they are in-scope.
Please get in touch if you would like to discuss how the MLRs might apply to your business.