Landscape Changes, New FCA Guidance for Crypto
The US, for example, has comprehensive regulations and legal framework for AML which impose rigorous requirements on financial institutions in reporting that can help the government find suspicious activity. The EU has a list of comprehensive AML regulations that member states are implementing into national law, standardizing these rules and implementing them across Europe. These directives include due diligence and reporting obligations among other practices that are supported by third-party regulation orgs.
Singapore is also a stellar example of AML enforcement in Asia with plenty of well-enforced regulation laws, as well as an active effort to stay updated on international standards for these laws. While many countries have been successful in taking steps towards AML adherence, there are still plenty of countries that struggle to meet these standards; and all countries must maintain a delicate balance of increasing necessary diligence and regulation, without hindering business or hurdling potential investors with unnecessary bureaucratic processes.
The FCA recently published a list of guidelines for state governments to help them facilitate a healthy environment for crypto trading. There is an onslaught of issues and risks that come with the rise in crypto usage including money-laundering, terrorist financing, tax evasion among other criminal uses of crypto. For this reason, it is imperative that countries follow a list of protocols that can minimize the risk of these transactions taking place and increase the integrity of their financial systems. Especially as countries with poorer infrastructure for AML and other regulations makes them an easy target for unwanted criminal activity.
Taking steps to follow AML and KYC laws is straightforward as there are plenty of international groups that declare a universal standard for these laws. These organizations often also provide well-documented and impartial indicators to show countries how well they are faring with international standards. The main challenge for these organizations is that as business practices continue to develop, which is continually being complicated by the rapid growth of technology, regulations must be kept updated in order to ensure the safety of these systems. As many countries work to be at the standard of current regulations, these guidelines will continually develop, and the bar is likely to become higher as modern technologies sharpen many risks that come with crypto usage.
Beyond just AML laws, the FCA guidelines looked at more nuanced issues related to dishonesty in the crypto space. An interesting point that the FCA guidelines advocated for was a review and potential regulation related to online cryptocurrency advertisements on social media. The FCA report stated that governments should take steps to ensure that cryptocurrencies that are being marketed should be marketed in a way that is honest and can give potential buyers a fair assessment of their qualities.
The FCA specifically emphasized the advertisements of these products on online platforms and social medias which can reach many people quickly and could potentially have harmful effects if buyers and impressionable audiences are being misled about a currency's assets. This element of social media complicating and increasing risk related to scams is an example of how regulations and laws must be frequently reviewed and updated to account for new issues in the space. With the increase of AI technology and others, there are many issues that are likely unforeseeable, so it is important that countries are not only able to catch up with current regulation standards, but also can apprehend future issues and complications that are stemming from the development of modern technology.