FCA warns FTX but looks to the future
FCA warns FTX but looks to the future
Crypto

FCA warns FTX but looks to the future

By George Michael Belardinelli - 29 Sep 2022

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A few days ago, the Financial Conduct Authority (FCA) had made headlines for wanting to make it clear in an official and very straightforward statement that FTX is not allowed to operate in the UK.

A few days ago the regulator stated:

“Almost all companies and individuals offering, promoting or selling financial services or products in the UK must be licensed or registered with us. We believe this company may provide financial services or products in the UK without our authorization.”

The news had made its way around the financial and crypto world in a very short time precisely because of the fact that FTX is one of the favorite exchanges of the British people, and a warning concerning it was bound to trigger reactions.

FCA: FTX’s operations in the UK

The Caribbean exchange platform FTX, which boasts $10 billion in daily trades and more than a million users, has caught on among many Britons and they prefer it to its American cousin Coinbase and Binance for their crypto trades.

Sam Bankman Fried, co-founder of the platform based in the Bahamas but originally from Antigua and Barbuda, has not yet obtained the necessary approval to carry out services in the territory of the Kingdom of His Majesty Charles III, nevertheless many investors already prefer it.

According to CEO and former lawyer Martin Cheek, what the regulator has done is nothing more than a clear statement of intent by the British FCA to increase its efforts in the crypto space.

With curious timing to say the least, the news comes at a time when FCA is hiring more staff for digital assets, issuing enforcement directives and working with the UK government to pass a bill on the subject.

During this period among other things, one figure above all speaks volumes about the British situation, money spent on crypto reaches the figure of 31.8 billion pounds, or $33.7 billion.

The hiatus to the FTX exchange by the UK’s Financial Conduct Authority is a blatant statement of intent for broader control, a leading AML expert warned.

Sam Bankman-Friend, CEO of AML ran to the defense of FTX arguing that in essence the FCA is pointing fingers when it knows full well that it is in no position to lecture on fairness as it is calling upon the British and all the people of the Kingdom to avoid using the exchange.

FCA wanted to specify that since FTX has not been authorized to operate, the state will not intervene to help customers in case of fraudulent loss of funds or various defaults.

As for the solvency of the FTX platform, following any problems that UK and non-EU account holders might eventually experience, the regulator (FCA) specified that:

“You won’t have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so it’s unlikely you’ll get your money back if things go wrong.”

The type of permissions for crypto traders

Martin Cheek, managing director of software provider AML SmartSearch, believes that crypto companies should put processes in place such that they can operate as if they were already regulated, so as to avoid the crosshairs of the Financial Conduct Authority.

SmartSearch AML is an AML software provider, and its verification platform conducts, among other things, both retail and corporate searches for the British crown but also for international markets with penalties that are triggered on their own globally (in this case within the Kingdom’s borders) if parameters are deemed unsuitable.

The ability to verify individuals and companies in the UK and internationally is unique to this company; the process is via browser or API, with full sanctioning, PEP and adverse media screening as well as constant monitoring over time even after authorization has been issued.

SmartSearch’s technology offers a user experience to approximately 5,50 unparalleled companies and over 50,000 users, enabling them to comply with the latest AML regulations and fulfill AML, Customer Due Diligence (CDD) and Know Your Customer (KYC) compliance obligations.

Without requiring customers to provide identification documents, SmartSearch’s automated verification is much more convenient for both users and their end customers, with individual AML checks taking two seconds from start to finish and all without providing identification documents.

“While it has long been a divisive topic, it appears that high levels of fraud and criminal activity have fostered a growing movement within the space for more regulation and reform. The FCA is undoubtedly leading the charge in the UK, whether that be be it appointing new digital assets and authorization personnel to speed up and strengthen the process, pull the plug on unauthorized crypto ATMs, or publicly call the likes of FTX. So while the number of licensed businesses may be a limited number for now It is clear that the efforts are expanding rapidly.We can only hope that the efforts will be just as quick to educate end users who have no guarantee with unregistered companies that adequate safeguards against financial crime are in place.

As an increasing number of companies trade in cryptocurrencies and accept digital currencies as payment, it is imperative that they treat them as cash and are aware of the risks associated with money laundering and serious financial crime. This means that enhanced due diligence and robust screening are a necessity to identify both the individual and the original source of funds.”

The software of Martin’s company is used by many cryptocurrency companies, including AutoCoinCars, Europe’s largest automotive crypto marketplace.

In order to ensure that cryptocurrency customers and dealers are legitimate, the company uses know-how related to company resources and data already held by the company.

Martin adds that.

“To meet the demands of this vibrant but challenging digital marketplace, businesses need a complete digital solution that helps mitigate the potential risk and heavy burden of compliance.

George Michael Belardinelli

A former corporate manager at Carifac Spa and later at Veneto Banca Scpa, blogger and Rhumière, over the years he has become passionate about philosophy and the opportunities that innovation and the media make available to us, in particular the metaverse and augmented reality

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