UK Sanctions on Russia and Belarus - Key Information for the Crypto Sector Part 1
Cryptoasset Firms Registered with FCA for AML Now Must File Information Reports with OFSI.
Yesterday the Government passed secondary legislation extending reporting obligations under the financial sanctions regime to cryptoasset exchange providers and custodian wallet providers. These entities are described in the same way as those caught by the Money Laundering and Terrorist Financing Regulations of December 2019 that imposed AML requirements on this aspect of the UK crypto industry. Thus, the new sanctions legislation appears to apply only to those registered cryptoasset firms that fall within the FCA's existing AML regulation, which number approximately 35 (per the FCA's website).
This secondary legislation governs all of the UK's sanctions programmes, but is most notable perhaps for its application to Russia and Belarus. It builds on the Joint Statement of the Bank of England, the FCA, and the Office of Financial Sanctions Implementation of 11 March regarding the obligations of the UK crypto sector in spotting attempted evasion of the UK's sanctions against Russia and Belarus, including by using blockchain analytics.
This new legislation now affirmatively requires these registered cryptoasset firms to inform OFSI as soon as practicable if they know, or have reasonable cause to suspect, that one of their customers is a person whose identity has been designated by name or description or who has committed certain offences against sanctions regulations. Failure to comply would be subject to serious penalties.
The effective date is 30 August 2022, so affected firms do not have much time to prepare. OFSI will host an explanatory webinar on Thursday 11 August, and have invited interested parties to request an invitation by email to ofsi@hmtreasury.gov.uk with the subject line 'Reporting obligations webinar - cryptoasset businesses'.
Part 2 of this article can be found here.