In January 2020, the Financial Conduct Authority released new FCA regulations for firms carrying on crypto asset activities in the United Kingdom. These regulations aim to ensure that crypto firms comply with the same Money Laundering, Terrorist Financing, and Transfer of Funds regulations as traditional financial firms.
A few days ago, the UK’s FCA reported that only 41 companies out of 300 firms that applied to be authorised were cleared. Others were either rejected, refused, or withdrew their applications due to certain reasons. 29 of these firms were reported to be rejected by the regulator. While the regulator didn’t mention why it rejected these companies, the feedback provided hinted that these companies didn’t follow the right procedures.
That said, here’s a burning question; how exactly can a crypto firm get FCA authorisation in 2023 by relying on MEMA Consultants?
What exactly is FCA authorisation?
The FCA or Financial Conduct Authority is the body in charge of regulating all financial-related services in the UK. This organisation only works by supervising authorised financial firms. The FCA authorisation is essential for any financial company and crypto firm looking to carry out its businesses in the country. Being FCA-authorised means your firm has been checked and confirmed to deliver good customer outcomes.
Does FCA reject crypto firms’ applications for authorisation?
The simple answer is yes, the UK’s Financial Conduct Authority can always reject a crypto firm’s application for FCA authorisation, depending on many factors.
According to recent reports, out of over 300 companies that applied for FCA registration, only about 15% were cleared. Reports further mentioned that 29 other firms were rejected while 195 companies either withdrew their applications or were refused approval. These latest reports show that FCA can certainly reject a crypto firm’s application if it doesn’t meet its requirements.
4 effective ways to get FCA authorisation today
Up till now, the regulator hasn’t come out to disclose why it rejected the applications of the 29 crypto firms for FCA authorisation. However, based on the feedback provided, we believe it has a lot to do with “poor applications.”
In the feedback provided by the FCA, the regulator said:
“This feedback should help applicants when they prepare their application for registration and help make the process as simple and efficient as possible.”
The feedback focused on how crypto firms can apply for FCA authorisation the right way. Here are a few things the regulator noted below:
- Include the details of your business model
As noted by the FCA, the first good step to achieving successful approval is by including the details of your business model. In case you don’t know how to go about it, MEMA Consultants is one of the leading FCA compliance consultants that can help you out. We have a team of consultants, which includes ex-regulators. Our experts understand exactly what to do to ensure the details of your business model are appropriately included in your application.
- What are the roles & responsibilities of your partners?
As a crypto firm, before you go ahead to apply for FCA authorisation, you need to understand your partners’ roles and responsibilities in your firm. This is important, as you need to include this information when preparing your application.
- Business-wide risk-assessment capabilities
Does your firm has comprehensive business-wide risk-assessment capabilities? If yes, it should be able to demonstrate them while preparing for that application for FCA authorisation. In addition, you need to also show that your firm has the right policies and systems to control risks.
MEMA is the leading FCA compliance consultant in the UK. We can assist you in drafting policies & procedures, including creating effective compliance programs that will help you get FCA approval. For clarity’s sake, you can learn more about the benefits of relying on our compliance consultant solutions.
