UK FCA Extends Annual Financial Crime Reporting to Cryptoasset Businesses

In March 2021, the UK’s Financial Conduct Authority (FCA) published the Extension of Annual Financial Crime Reporting Obligation, Policy Statement PS21/4 (PS21/4). Formally concluding the consultation process initiated by the FCA in August 2020, PS21/4 brings cryptoasset businesses, in addition to other businesses, into the scope of annual “REP-CRIM” reporting. As a result of the new policy, the number of businesses required to submit a REP-CRIM return will increase from 2,500 to 7,000 business.

Guidehouse advises cryptoasset businesses to be aware of these changes, as they are now required to submit a REP-CRIM to the FCA within 60 business days after their first Accounting Reference Date falling after 30 March 2022. This date is chosen by the FCA to allow cryptoasset businesses at least 12 months from their due date for registration (i.e., by 10 January 2021) indicating an evolution in regulatory activity for these businesses.

Details

To comply with PS21/4, cryptoasset businesses will need to report data for the areas of their business subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 including:

  1. Jurisdictions in which a firm operates, including jurisdictions considered to be high-risk by a firm. 
  2. Customer information, including the total number of relationships with politically exposed persons, non-European Economic Area correspondent banks, high risk customers, a breakdown of customers by jurisdictional region, and customer refusals or exits for financial crime reasons.
  3. Compliance information, which includes metrics on Suspicious Activity Reports, investigative court orders, and employee numbers. 

REP-CRIM also includes reporting metrics related to fraud and sanctions, but the submission of these metrics is voluntary. 

What You Should Start Doing

Cryptoasset businesses should familiarise themselves with REP-CRIM reporting requirements and ensure that they maintain systems and processes that are capable of accurately obtaining prescribed reporting data. 

Businesses should assess their management capabilities to identify whether they can fully and accurately report all the information required by the FCA.

Internal and external audit teams, as well as compliance-testing teams, should make accurate documentation and internal reporting of these requirements a priority in their upcoming audit plans.

Businesses should refer to SUP 16.23 “Annual Financial Crime Report” within the FCA Handbook, for further information with respect to the REP-CRIME reporting requirement, method, timeline, and the applicability.

What Guidehouse Can Do For You

Guidehouse can help you assess your compliance programs to identify and enhance operations, policies, procedures, controls, and technology as needed. Guidehouse has been at the forefront working with market participants as new products and technologies become increasingly widespread. 

Guidehouse is well-equipped to make an individualised assessment of your unique circumstances and offers innovative advice and solutions for responding to heightened regulatory requirements.

Specifically, Guidehouse can help you conduct gap assessments and technology assessments to determine your company’s abilities to pull in relevant data across your organization and report it to the FCA.

Please reach out to us if you would like to discuss further how we can assist you. 

Special thanks to contributing authors Neema Wadhia. 

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