A large number of UK crypto firms are not meeting anti-money laundering standards, the national regulator has said

• A large number of UK crypto firms are not meeting anti-money laundering rules, the regulator said.
• The FCA has found numerous companies are failing in areas such as due diligence and training.
• Regulators are increasing their scrutiny of cryptocurrencies, which have boomed in 2021.

A significantly large number of cryptocurrency firms are not meeting the required anti-money laundering standards, the UK's financial watchdog has said.

The country's Financial Conduct Authority found numerous crypto firms that had applied to be registered with it were not up to scratch when it came to protecting against crime, a person familiar with the matter said.

Among the problems were companies having inadequate systems to identify and prevent money laundering; a lack of knowledge and skills from key staff; and failures to carry out due diligence on new customers.

In total, 51 companies have withdrawn their applications to be registered with the FCA under its anti-money laundering regulations. Most of them did so after the FCA found fault with their businesses, although some withdrew voluntarily.

Cryptocurrencies have long been attractive for criminals, given that they're decentralized and very difficult to trace.

But regulators around the world have increased their scrutiny of cryptocurrencies as bitcoin and others have soared in value in recent months.

Christine Lagarde, President of the European Central Bank, said in January she was concerned that bitcoin was being used for some "totally reprehensible money laundering activity." She called for regulation at a global level.

In the UK, the FCA has required crypto firms to register with it to check they comply with anti-money laundering rules. So far, only five firms have been officially registered, out of almost 200 that applied.

Another 90 have been temporarily registered, allowing them to keep operating, and the FCA said it will extend the temporary registration regime until the end of March 2022.

"The FCA will only register firms where it is confident that processes are in place to identify and prevent this activity," it said.