Cryptoassets businesses and Money Laundering Regulations

From January 2020 the FCA will be the UK supervisor for cryptoasset businesses in respect of Anti-Money Laundering and Counter Terrorist Financing, under amended Money Laundering Regulations (MLRs).

Cryptoassets are developing change connected to the financial services sector. 

Both the concept, and the underpinning distributed ledger technology are attracting significant attention and the UK Government established a Cryptoassets Taskforce in 2018 as part of its FinTech Sector Strategy. 

The Taskforce published its final report in October 2018, providing an overview of its perspective on the subject, including the underlying technology, the associated risks, potential benefits and a way forward with respect to regulation in the UK. 

In reaching conclusions the Taskforce outlined the need for action to mitigate the risks for consumer harm, prevent the use of cryptoasset for illicit activity and guard against threats to financial stability that could emerge in the future. 

It’s report sets out three broad types of cryptoassets and typical uses, which together help establish a framework for considering the impact, potential risks and need for regulation. 

In setting out its role the FCA has specified a range of Cryptoasset activities that are captured under the new regime and businesses conducting these activities will be required to comply with the MLRs. 

The businesses include existing financial institutions that offer the option to convert cryptoassets to fiat (government issued currency), or accept cryptoassets as collateral against a loan or purchase. 

The regime will also apply to new businesses and developing business models such as peer to peer providers, digital wallet providers offering a crypto service such as exchange or custodian services, Cryptoasset ATM’s, and issuers of cryptoassets.

Fintech innovators are taking advantage of the growing cryptoasset trend. Some are aiming to make crypto work seamlessly with traditional currencies by developing technology capability that will enable cryptoassets such as Bitcoin to convert to fiat money. It presents new opportunities and challenges for many and is another developing example of the potential directional change digital will bring to financial services. 

All impacted businesses will be expected to comply with the MLRs in relation to cryptoasset activities by 10 January 2020. The expectations include the ability to demonstrate that each business has thought about the respective nature, scale and complexity of its activities and the associated risks. Businesses also need to have the appropriate controls in place to mitigate risks and will be expected to keep these under review and regularly assessed to ensure they remain fit for purpose and relevant. 

In setting out its responsibilities and the approach it will take to this work the FCA has signposted firms to a number of existing resources to help build an understanding of its expectations when it comes to managing financial crime risks. 

These include the FCA’s Financial Crime Guide: to countering financial crime risks, the Joint Money Laundering Steering Group (JMLSG) website, and recommendations from The Financial Action Task Force (FATF) an inter-governmental and global body. Further detail on the FCA’s approach can be found here.

Crypto currency ATM’s appearing in more Scottish cities

Photo by David McBee from Pexels

Crypto currency ATM’s now in Dundee and Aberdeen

2 Scottish cities, Dundee and Aberdeen, have installed their first ever Bitcoin ATMs.

Alphavend UK, Scotland’s leading Digital Currency ATM operator, has just announced that it had installed Bitcoin ATM machines in Dundee (Nethergate) and Aberdeen (Bridge Street).

Citizens can now buy Bitcoin, without having to make long journeys to cities such as Glasgow or Edinburgh and in a way that’s easier than easier than before by simply exchanging cash for the famous cryptocoins.

Alphavend has planned to instal more machines in the UK and is growing rapidly to keep pace with the growing interest and demand which has never been higher.

The high demand can be explained by Bitcoin being chosen more and more as a cost-effective way of sending money around the world.

A Meeting of Coins!

Blog by (Prof) Christine Bamford Founder Women’s Coin    

For readers who didn’t know ”¦

Scotland is the first country in the UK (possibly Europe) to be home to 2 global digital currenciesWomen’s Coin and Scotcoin!  How cool is that!

It can’t be a consequence that 2 digital currencies have emerged from Scotland.  It’s the foresight of the Scottish Government, Scottish Enterprise and Fintech Scotland as a hub for innovation in financial technology. Not to mention active support for emergent technologies by Kate Forbes, Minister for Digital Technologies.  Who I think is just fab!

Left: Kate Forbes, Minister for Public Finance & Digital Technology, (Prof) Christine Bamford and Dr Jane Lewis, Women’s Coin

Fintech Scotland, Napier University and other key stakeholders such as Virgin Money, Zortrex, Money MatiX, CU Apps and Payment Centric were so welcoming that we decided to establish Women’s Coin here in Edinburgh.  There is no doubt that Scotland makes stuff happen and has a real entrepreneurial spirit.

So how did we connect with Scotcoin?  Well it’s all down to Fintech brokering service.  It took a couple of meetings to establish a trusted relationship but now we feel that there is power in a collective approach

Temple Melville, Director. Scotcoin commented  “There was synergy between our coin offerings and a mutual  desire to move towards a ICO (initial coin offering) through a legal regulated framework”   Dr Jane Lewis, Strategic Director, Women’s Coin added  “We have a track record in successful partnership working –  So it made sense for us to explore how we might jointly raise our profile and collaborate on trading”

What is Women’s Coin? It is a digital currency for women (& men) with a humanitarian arm using blockchain to deliver charitable giving to the point in need without third party intervention.  Every time you use women’s coin payment you support another woman to survive in the most hostile environments on earth.  Supporting United Nations SDF 5 (Women’s Empowerment) A coin with a heart

See website http//womenscoin.com

Scotcoin does what is says on the tin.  A digital currency for everyone ”“ anywhere!

 To celebrate “Coin Collaboration”Fintech supporters will be invited to learn more about our “Coins” blockchain and crypto currencies during September Fintech Festival 9^th-27^thSeptember

Are You Ready for Blockchain? Collaboration Could be Key

Photo by Hitesh Choudhary on Unsplash

It’s undeniable that blockchain is a complicated and, at times, daunting technological development. Having said this, the opportunities proposed are as exciting as they are complex. From reshaping business transactions to the secure and accurate exchange of data – blockchain has the potential to improve nearly every financial service industry.

This poses an issue of great internal debate for businesses in markets which could truly benefit from the traceability, security and wider potential presented by blockchain.

As a business, should you invest in tech that could ultimately revolutionise your capabilities at the risk of encountering stumbling blocks? Or, do you sit back and watch while others in your sector pick up the early adopter mantel?

Collaboration could be the answer.

Here, we delve deeper into this dilemma faced by businesses considering incorporating blockchain technology into their wider strategy, and help answer the question; is your business ready for blockchain?

What is the impact of blockchain?

Blockchain is far more than just a channel for cryptocurrency and can offer far reaching business applications. Here are some of the key impacts blockchain could have on your business:

• Automation
• Transparency
• Autonomy
• Security
• Reduced error handling
• Member accountability

How can blockchain help businesses?

When considering whether blockchain is a worthy investment for your business, it’s important to consider what its wider applications could be. This technology can provide clear solutions to challenges in wide-ranging sectors. However, as a business owner, you need to be sure that the investment will benefit your company.

Here are just a few ways blockchain could benefit your business:

• Shared data across several participants or external parties
• Access to edit or update information needed by multiple participants
• Recorded verification and security of participants and users
• Reduction of cost through decentralised record keeping
• Time sensitive information sharing and updates
• Instant, interactive transactions between different participants
• Improved capital optimisation

Should you consider blockchain for your business?

No one is disputing that blockchain is going to become increasingly influential over time. Having said this, it simply isn’t needed by everyone at this stage. If you’re sitting on the fence, there are many points to consider.

Blockchain shouldn’t be considered as an aspiration to achieve for your company. It’s an enabler to aid in the efficiency or cost reduction of your existing processes. Don’t position this technology as a capability which validates your business’ proposition. Instead, it’s a tool to improve your business models and dealings with other companies. If it’s not addressing a current issue or opportunity, it simply isn’t for you at this stage.

Finding your opportunity

Monitoring the way distributed ledger or blockchain technology is used in similar industries is a great place to start when seeking potential opportunities. It’s important to be aware of any competitors who attempt to leverage this tech before you as it may leave you at a serious disadvantage later on.

Consider whether your business could work smarter’ using blockchain and whether you can leverage enough influence to truly benefit from doing so.

What Can EEN Offer Your Business in Terms of Collaboration?

Enterprise Europe Network (EEN) provides a network of specialist support to help companies do business in Europe and beyond. From helping with access to funding to finding trusted partners, EEN can help your business grow internationally.

Here’s how EEN can help:

• Improve the way you manage innovation
• Track down long-term finance from public and private sectors
• Provide a network of world-wide advisers
• Help you find trusted partnerships
• Help you expand into new markets and countries with help from local experts
• Expand and scale-up your business

With hundreds of collaborative partnership opportunities available, EEN allows you to search for SME and academic business partners to develop your products, ideas and services.

Current Opportunities with EEN

Here are some examples of live opportunities available through EEN:

• A UK business is offering a blockchain based employee background checking toolkit to make employee checks more efficient.
  • They are looking for organisations that are seeking improvements using automation, candidate experience, candidate privacy and modernising employment checks.
• A London company has developed a next generation private, permissioned blockchain development platform. The platform enables businesses to take advantage of the benefits of the blockchain and apply them to business solutions and applications.
  • They are seeking partners to sign commercial agency and license agreements across a wide range of industries to pilot test their built platform.
• A London based start-up is seeking a software developer with relevant technical skills in AI, ML and Blockchain to develop a professional social media and communication cost centre management platform.
  • The business wishes to develop service agreements with businesses possessing the technical expertise that will help the company to realise its vision of disrupting technology in the healthcare industry.
• A Portuguese SME specialising in software as a service (SaaS) solutions for fintech and business communication is looking for partners to cooperate under a commercial agency agreement.
  • This SME is interested in commercial agency agreements with international partners to pursue their scale-up strategy in European and non-European markets.

How to ensure you’re ready for the implementation of blockchain

Is your business ready to begin blockchain implementation?

There are several factors to consider;

• Commercial gain – is there a value to be taken from this technology?
• Compliance – will this technology comply with the regulations your business is required to meet?
• Execution – do you have the right skills and resources to actually make this work?
• Technical capabilities – can the technology be seamlessly integrated?
• Transparent operations – have you planned a fair and transparent way of governing the wider operational aspects of integrating this technology?

Partnership Opportunities in Blockchain

Enterprise Europe Network (EEN) helps businesses to find global partnership opportunities with SMEs or academia to help manufacture, develop and supply their products, ideas and services. If you’re considering implementing this technology into your business, explore EEN’s blockchain partnership opportunities.