The Financial Conduct Authority (FCA) has told UK banks that they must take steps to better prepare for cryptocurrencies, thus lessening the risk of cybercrime.
The warning comes in the form of a letter from the FCA addressed to domestic bank CEOs in the UK, urging them to take steps such as developing staff knowledge of cryptoassets, engaging with clients, carrying out ‘due diligence’ on key clients, and more.
The letter reads: “There are many non-criminal motives for using cryptoassets. These include using them as high-risk speculative investments or as a means of funding innovative technological development.
“However, this class of product can also be abused because it offers potential anonymity and the ability to move money between countries. You should take reasonable and proportionate measures to lessen the risk of your firm facilitating financial crimes which are enabled by cryptoassets.”
The FCA also details some of the red flags or ‘high-risk indicators’ to look for, ausch as a customer using a state-sponsored cryptoasset designed to evade international financial sanctions.
“Following a risk-based approach does not mean banks should approach all clients operating in these activities in the same way,” the letter continued. “Instead, we expect banks to recognise that the risk associated with different business relationships in a single broad category can vary, and to manage those risks appropriately.”