FCA continues crypto ATM crackdown and warns of further action again ‘illegal’ sites
The Financial Conduct Authority (FCA) said it had inspected sites in Exeter, Nottingham and Sheffield suspected of hosting illegally operated crypto ATMs, as part of a continued crackdown on the illegal sector.
The city watchdog said the inspections were part of a joint operation with the South West Regional Organised Crime Unit, Yorkshire and Humber Regional Organised Crime Unit and the Nottinghamshire Police force.
Therese Chambers, executive director of enforcement and market oversight at the FCA, said crypto ATMs operating without FCA registration were illegal. She said: “The action we’ve taken over the past few months and wider work shows that we will act to stop illegal activity.
“Besides disrupting unregistered crypto businesses, the joint efforts have helped raise awareness of illegally operated crypto ATMs in the UK among the public.
“This is especially important as crypto products are high risk and not currently regulated. That means you should be prepared to lose all your money if you invest in them.”
Peter Highway, economic crime unit manager at the South West Regional Organised Crime Unit (SWROCU), said: “Criminals will use crypto ATMs to launder illegally obtained cash, so we were pleased to assist our colleagues at the FCA in targeting businesses in the region displaying these machines without authorisation.”
Ramona Senior, head of economic crime at the Yorkshire and Humber Regional Organised Crime Unit (YH ROCU), said: “Machines such as these are a key component in the facilitation of money laundering and the movement of funds acquired through criminal activity.”
“Crypto ATMs allow people to buy or convert money into cryptoassets. There are no crypto ATM operators registered with the FCA, which they must be to operate legally.
The FCA, which is working with the National Economic Crime Centre to plan and coordinate action with law enforcement partners in relation to operators of illegal crypto ATMs. Today’s action follows that taken in Leeds and East London, where the FCA inspected several premises suspected of hosting unregistered crypto ATMs, alongside regional organised crimes units.
The FCA will review evidence gathered during these visits and consider taking further action where necessary.
Earlier this year the FCA warned crypto businesses that breaching new financial promotion regulations could lead to executives facing up to two years in prison.
It warned that crypto companies which fail to meet its financial promotion rules will breach the Financial Services and Markets Act, “a criminal offence punishable by up to two years imprisonment.”
Crypto crackdown – ‘more for regulators to do’
Nicola McKinney, a partner at Quillon Law said criminal prosecutions might arise from the raids of illegal crypto ATMs if seized documents point to evidence of fraud and digital asset crime.
“It has taken the FCA almost a year to undertake enforcement action against illegal crypto ATMS since issuing warnings in early 2022 and, while it is reassuring to see that concrete steps have been taken to protect investors, it does not inspire confidence that measures such as these have taken so long.
“Crypto ATMs based in the UK are the only affected entities in this instance and the probability that the majority of transactions converting fiat currency to cryptocurrency take place through online providers, further complicates the job of regulators and enforcement agencies due to the jurisdictional complexities this presents.
“There is still much for UK regulators and law enforcement to do in policing this rapidly evolving sector, and as crypto crime becomes more sophisticated it will require greater cross-border cooperation to create a sufficient global regulatory framework.”
FCA inspections continue
This action follows the FCA’s inspection of several sites in East London and Leeds that were suspected of hosting unregistered crypto ATMs.
The FCA regularly warns consumers that cryptoassets are unregulated and high-risk which means people are very unlikely to have any protection if things go wrong.
Cryptoasset exchange providers, which includes Crypto ATM operators, in the UK must be registered with the FCA and comply with the UK Money Laundering Regulations. This includes operators of crypto ATMs.
The FCA carried out these visits using investigative powers under the Money Laundering Regulations 2017.
The FCA has previously warned operators of crypto ATMs in the UK to shut their machines down or face enforcement action.
The FCA publishes a list of business that it suspects are operating without our authorisation.