UK regulator orders crypto exchanges to report sanctions breaches in the country

British Financial Conduct Authority (FCA) stated cryptocurrency exchanges must play their part in ensuring sanctions are complied with. According to updated guidance from the Treasury’s Office of Financial Sanctions Implementation (OFSI), the agency ordered crypto exchanges to report sanction breaches in the UK.

The UK Treasury’s Office of Financial Sanctions Implementation (OFSI) has updated on Sept. 2. its guidance on sanctions, which now include crypto exchanges.

According to updated documents from the OFSI, as banks and financial services firms have been facing strict Russian sanctions requirements for months, cryptocurrency exchanges must now also comply. The Guardian pfirst ublished the change in OFSI’s guidance, which was implemented on August 30.

This year, financial sanctions have received greater attention following Russia’s invasion of Ukraine, which saw countries, including the UK, slap restrictions on interactions with Russian entities. They are put in place to achieve foreign policy or national security goals and can impose various measures – from targeted asset freezes to restrictions on financial services.

The updated document says that exchanges must now report any suspected breach to the OFSI and freeze funds or face criminal charges or financial penalties. Furthermore, custodian wallet providers are also subject to reporting obligations, according to the sanctions guidelines.

Back in March, the UK FCA said that crypto exchanges must play their part in ensuring sanctions are complied with, providing guidance on how to comply. 

Due to UK laws that cover all “economic resources,” it was already illegal to evade sanctions using cryptocurrencies. Meantime, this change focuses on the entities that enable transactions instead.

“These new requirements will cover firms that either record holdings of or enable the transfer of cryptoassets and are therefore most likely to hold relevant information,” a UK Treasury spokesperson commented.

Last summer, Britain’s financial regulator ordered Binance Markets Ltd., one of the world’s largest crypto exchanges, to stop conducting any regulated activity in the UK.