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The Financial Conduct Authority (FCA) has declined Zeux Limited’s application to register as a cryptoasset exchange provider under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), citing significant risks of harm to the public.
Failure to Meet Regulatory Standards
Zeux Limited submitted its application in June 2022, but the FCA found critical deficiencies in its anti-money laundering (AML) controls and risk management framework. The firm failed to:
Understand, identify, and document risks associated with cryptoasset transactions.
Consider the UK’s National Risk Assessment, which highlights key money laundering and terrorist financing threats.
Implement effective customer risk assessment and enhanced due diligence measures to detect suspicious activities.
Ensure proper suspicious activity reporting (SAR) protocols to mitigate financial crime risks.
Given these significant shortcomings, the FCA determined that approving Zeux Limited’s application would have posed an unacceptable risk to consumers and the financial system.
The Importance of Strong AML Controls in Crypto
The FCA remains committed to fostering a competitive and innovative crypto sector while ensuring that firms uphold robust compliance frameworks to protect market integrity. Effective AML controls are fundamental to preventing money laundering, terrorist financing, and sanctions evasion.
Under UK law, cryptoasset exchange providers must be registered with the FCA and comply with the MLRs to operate legally. The regulator strongly encourages firms seeking registration to engage with the FCA early, attend pre-application meetings, and review guidance on best practices for compliance.
Guidance for Crypto Firms Seeking Registration
Firms interested in applying for FCA registration should:
Review regulatory requirements and FAQs on the FCA’s dedicated crypto firms webpage.
Examine examples of good and poor practices for preparing a compliant application.
Engage with the FCA early by booking a pre-application meeting at DigitalAssetsPreApp@fca.org.uk.
Submit complete applications with thorough documentation to facilitate the assessment process.
This latest refusal underscores the FCA’s firm stance on enforcing AML regulations and ensuring that only compliant firms operate within the UK’s crypto market. Crypto firms must prioritise regulatory compliance to secure registration and maintain trust in the sector.
Read the decision notice here.
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