FCA has published its feedback on good and poor quality applications made by crypto firms under the MLRs. FCA has seen and refused so many bad quality applications it has now provided guidance to firms on what they have to do before and during submission and review of the application. Common issues include:
- applicants not understanding the MLRs and therefore not understanding whether they apply;
- applicants appointing MLROs who have insufficient understanding of both crypto and the MLRO role;
- submitting poor quality business plans which lack realistic forecasts or lack descriptions of how the firm will comply with its regulatory obligations;
- applications which fail to recognise the risks of the business and how they will be managed;
- submissions of underdeveloped AML frameworks;
- applicants having insufficient monitoring frameworks;
- inadequate training plans and generic SAR policies;
- failure to understand the sanctions regimes and their application; and
- misleading websites.
Applicants must also ensure they do not use their applications to promote themselves or suggest any FCA endorsement.
Finally, FCA stresses that applicants must appreciate that registration is not a one-off exercise and they must continuously comply with relevant requirements.