To combat the alleged risks associated with crypto assets and their networks, Her Majesty’s Treasury, the United Kingdom’s finance and economics department, has added additional measures.

The new Money Laundering Regulations, or MLRs position the U.K.’s Financial Conduct Authority (FCA) as the Anti-Money Laundering (AML) overseer for certain crypto objectives, Director of Retail and Regulatory Investigations, Therese Chambers said in a March 6 speech.

These MLRs go “beyond the 5MLD to include a broader set of activities, such as Initial Coin Offerings (ICOs), as recommended by FATF last year,” Chamber’s said.

The EU already has strict AML

The European Union, or EU, cemented new AML regulations in July 2018, called the 5th Anti-Money Laundering Directive, or 5AMLD.

To avoid the new 5AMLD regulations, crypto exchange Deribit left the EU’s Netherland’s in January 2020, finding solace in Panama.

In her speech, Chambers claimed cryptocurrencies carry a significant money laundering risk, as they allow financial value transfer without requiring a “financial intermediary,” meaning users can send funds anonymously.

Chambers noted the belief that protection goes hand in hand with innovation growth.

MLRs pertain to crypto on-ramps

Chambers explained that the FCA’s regulatory overwatch focuses more on the business dealings within the crypto space.

MLRs pertain to exchanges that offer fiat pairings, as well as those dealing in crypto pairings. Chambers also included FCA authority over custodial wallet providers, ICOs, IEOs and crypto ATMs.

Any operation conducting any of the mentioned activities must show the FCA risk assessment, customer due diligence, transaction monitoring, record-keeping and suspicious activity reporting, Chambers detailed.

Chambers added:

“When a firm arrives at the FCA’s gateway looking to apply for registration, we believe that a 'good' application will clearly demonstrate to our authorisations team that they have robust systems and controls to cover each of these areas. But fundamentally, we are looking for more than just whether the firm has the right policies and procedures, we need to be satisfied that the firm take seriously their responsibilities to prevent their business being used to launder the proceeds of crime.”

Although Chambers mentioned that protection supports innovation, the anonymity behind Bitcoin and other crypto assets is one of the industry's trademark attributes. Still, governments continue adding such regulation.

In August 2019, Cointelegraph reported on the Financial Action Task Force, or FATF, which also aimed to snuff out anonymity in the crypto space.