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The UK’s Financial Conduct Authority (FCA) is cracking down on unregistered crypto ATMs.
The regulator says it recently entered and inspected several sites near the city of Leeds, in the North of England, which was suspected of hosting illegally operated crypto ATMs.
The FCA says it collaborated with local police forces, including the West Yorkshire Police’s Digital Intelligence and Investigation Unit, as part of the joint investigations into these sites.
“Crypto businesses operating in the UK need to be registered with the FCA for anti-money laundering purposes,” said the FCA’s executive director of enforcement and market oversight Mark Steward. “However, crypto products themselves are currently unregulated and high-risk, and you should be prepared to lose all your money if you invest in them.”
As per the announcement, the FCA is set to review the evidence it collected during these visits and will consider further enforcement.
Detective Sergent Lindsay Brants of the West Yorkshire police's Force Cyber Team said that "warning letters were issued requesting the operators cease and desist using the machines and that any breach of regulations would result in an investigation under money-laundering regulations."
In March 2022, the FCA wrote to all operators and hosts to warn crypto ATMs about the legal consequences of running crypto ATMs without FCA authorization
Though there is technically no specific law against crypto ATMs in the UK, none have been granted FCA approval as of the time of writing.
The links between crypto ATMs and money laundering are anything but theoretical, and potential links between these ATMs and organized crime have been highlighted across the world.
A 2020 study from the U.S. Drug Enforcement Agency (DEA) discussed how it has seen crypto ATMs being used by transnational criminal organizations for laundering illicit drug money, alongside more traditional methods.
The state of UK crypto regulation
It’s not just the remaining crypto ATMs that are under scrutiny, the UK seems to be looking to implement much harsher crypto regulations across the board.
Earlier this month, the UK Treasury outlined new rules in a consultation paper that may mean crypto firms operating in the UK will have to fulfill a stricter set of requirements, more in line with those of traditional financial services.
And for companies interested in advertising crypto products in the UK, they’ll also soon need authorization from the FCA.
As per a recent statement, firms that do not follow one of the four mandated routes for promoting cryptocurrencies could face criminal punishment “by up to two years imprisonment.”