UK Authority Warns Banks to Strengthen Scrutiny on Cryptocurrency Clients

Jun 14, 2018 at 09:09 // News
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Banks to strengthen scrutiny

The United Kingdom’s Financial Conduct Authority (FCA) has officially asked bank CEOs to ‘enhance scrutiny’ in order to avoid the financial scams related to digital currencies. The watchdog also suggested banks create a special expertise for their staff helping them to identify financial activities of a high-risk.

The FCA issued a letter asking the country’s banks to increase the level of accuracy while dealing with clients who possess a large amount of money derived from crypto market activities. These clients are seen, basically, as crypto exchanges, individual traders, and companies starting up an initial coin offering (ICO). By calling virtual coins ‘crypto assets’, the financial institution implies that they can be used for illegal purposes due to their anonymity.

To prevent possible financial crimes, the FCA recommends taking a number of measures. Firstly, banks must conduct due diligence on the clients in order to understand the possible risks of their businesses. Besides, it is required to ensure that current financial crime measures work properly and reflect the crypto-related activities of their clients.

The FCA also mentioned a couple of ‘high-risk indicators’ that the financial market services should pay attention to. The first example is a state-run crypto coin used by their clients to evade international financial sanctions, like in the case with Venezuela’s Petro. Another example is retail clients who invest much money to ICOs. The FCA explains that there are high chances to become a victim of a fintech fraud.

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