Crypto firms urged to ensure they have the ‘most stringent customer due diligence’ after NCA seizes £27m in crypto-assets

Crypto firms are being urged to ensure their customer due diligence is watertight so they do not inadvertently facilitate financial crime, following a huge crack down on the sector by the National Crime Agency (NCA).

In its latest annual report, the NCA revealed it seized £27million in cryptocurrency suspected of being derived from criminal activity in 2021-22, compared to £0 in 2020.

In fact, of the £59.8m in third-party assets confiscated over the 2021-22 report period, more virtual currency was seized than physical assets (£7m) or fiat currency (£26m), highlighting how - as crypto use continues to increase - money launderers are increasingly exploiting it in order to clean their dirty cash.

Martin Cheek, Managing Director at anti-money laundering specialist SmartSearch said; “Over the last few years, crypto has absolutely exploded in popularity, but unfortunately, international rules and regulations have not kept pace meaning it is far too easy for criminals to manipulate crypto for their own gains.

“We currently have a situation where crypto – a highly volatile currency - is competing on a level with banks and payment systems - and diverting investment capital from the traditional stock market - but does not come under the same scrutiny, and this could be a perfect storm, posing a serious threat to the global economy.”

“It is therefore up to crypto firms, as well as any other financial institutions and professional services firms that manage crypto assets to ensure they have the most stringent customer due diligence in place to ensure they are not becoming enablers of financial crime.

“However, many firms struggle to meet their obligations – usually because they do not have the resources to do so and end up in a ‘box ticking' exercise rather than employing proper procedures that will actually prevent money laundering.

“Not only does this leave them open to becoming enablers of financial crime, but also at huge risk of fines for non-compliance, and even criminal proceedings.”

The most reliable and robust way for firms handling crypto to prevent money laundering and ensure they are meeting their legal obligations is to use an electronic AML solution that performs identification, verification and screening with ongoing monitoring. This will ensure they know exactly who their customers are and will be alerted of their risk level changes.

To find out how SmartSearch can help you prevent money laundering and meet all your legal requirements, visit: https://www.smartsearch.com/sectors/cryptocurrency