FCA opens 432 cases against unregistered or scam crypto businesses in 2021/22
The UK Financial Conduct Authority (FCA) has published its fourth Consumer Investments Data Review. It covers 1 April 2021 to 31 March 2022.
The data reveals that the regulator opened 432 cases against potential unregistered or scam crypto businesses in 2021/22.
Although the FCA does not regulate cryptoassets, it is responsible for supervising some cryptoasset firms’ compliance with the Money Laundering Regulations (MLRs). The FCA Digital Assets department seeks to identify, manage and reduce risks of potential harm from active and registered firms. This includes rapidly intervening where firms are at risk of being used as conduits for illegal activity, or where they pose harm to consumers or market integrity.
The department also takes action against cryptoasset scams, and on firms operating as cryptoasset businesses without being registered.
The FCA takes action against firms and individuals who are not authorised or exempt under FSMA but who carry on regulated activities in breach of the legislation and/or who disregard restrictions on financial promotions. Many firms and individuals acting in breach of FSMA and carrying on unauthorised activity are likely to be scam firms and involved in investment fraud.
The regulator received nearly 30,000 reports of potential unauthorised business between April 2021 and March 2022.
Over 70% of these reports the FCA is either already aware of or fall outside its remit. The FCA either logs the remaining reports for intelligence purposes or opens them as enquiries for further review. Enquiries may involve the FCA working to disrupt unauthorised business, such as issuing consumer alerts, taking steps to remove websites and working with firms to resolve a breach.
The most serious cases become enforcement investigations into serious misconduct using the FCA formal powers. The regulator currently has 49 enforcement investigations into 217 unauthorised firms and individuals.
Due to the high volume of reports and their complexity, the outcomes of these can vary from year to year depending on many factors. These include the nature of the reports, the FCA approach to triaging cases and the resources it can dedicate to this work.