UK’s FCA clamps down on Illegal crypto ATMs

The regulator says it recently entered and inspected several sites near the city of Leeds, in the North of England, which was suspected of hosting illegally operated crypto ATMs

The UK’s Financial Conduct Authority (FCA) is clamping down on unregistered crypto ATMs.

The regulator says it recently entered and inspected a number of sites near Leeds, in the North of England, which was suspected of hosting illegally operated crypto ATMs.

The Financial Conduct Authority says it collaborated with local police forces, including the West Yorkshire Police’s Digital Intelligence and Investigation Unit, as part of the joint investigations into these sites.

Crypto businesses operating in the UK need to be registered with the Financial Conduct Authority for anti-money laundering purposes, said the FCA’s executive director of enforcement and market oversight Mark Steward. Though, crypto products themselves are at present unregulated and high-risk, and you should be prepared to lose all your money if you invest in them.

According to the announcement, the Financial Conduct Authority is set to review the evidence it collected during these visits and will consider further enforcement.

Detective Sergeant Lindsay Brants of the West Yorkshire police’s Force Cyber Team said that ‘warning letters were issued requesting the operators cease and desist using the machines and that any breach of regulations would result in an investigation under money-laundering regulations.’

In March 2022, the Financial Conduct Authority wrote to all crypto ATM operators and hosts to warn about the legal consequences of running crypto ATMs without Financial Conduct Authority authorization.

Though there is technically no specific law against crypto ATMs in the UK, currently none have been granted Financial Conduct Authority approval.

The connections between crypto ATMs and money laundering are anything but theoretical, and potential connections between these ATMs and organized crime have been highlighted around the world.

A study from the U.S. Drug Enforcement Agency (DEA) in 2020 discussed how it has seen crypto ATMs being used by international criminal organizations for laundering illegal drug money, along with more conventional ways.

It is not just the remaining crypto ATMs that are under scrutiny, the UK seems to be looking to implement much stronger crypto regulations across the board.

Earlier this month, the UK Treasury outlined new rules in a consultation paper that may mean crypto companies operating in the UK will have to meet a stricter set of conditions, more in line with those of conventional financial services.