In a joint operation with HMRC and the SWROCU, the UK's Financial Conduct Authority has conducted its first large-scale crackdown on illicit peer-to-peer cryptocurrency trading. The operation targeted eight locations across London, resulting in the issuance of cease-and-desist notices and the collection of evidence for multiple ongoing criminal investigations. The targeted sites were suspected of facilitating direct cryptocurrency transactions between individuals without proper registration or anti-money laundering measures, posing a significant risk of financial crime.
Under UK law, all cryptocurrency exchange providers are required to register with the FCA, yet currently, no peer-to-peer crypto traders or platforms are registered in the country. According to Steve Smart, the FCA's executive director of enforcement and market oversight, unregistered peer-to-peer crypto traders operating in the UK are acting illegally and pose a significant financial crime risk. Law enforcement agencies view this operation as part of a broader effort to disrupt the flow of illicit funds.
The SWROCU's DI Ross Flay noted that unregistered traders can enable criminals to launder and spend illegal proceeds. This enforcement action builds upon previous efforts, including the prosecution of operators of illegal crypto ATMs and the arrest of individuals linked to unregistered crypto exchanges. Last year, the FCA also took action against an offshore platform for unlawful financial promotions and expanded its oversight of social media figures promoting high-risk crypto products. As the UK prepares to introduce a comprehensive regulatory regime for crypto by October 2027, the FCA is urging consumers to verify the registration status of firms using its online register and warning of the risks associated with dealing with unregistered P2P traders, including the lack of access to the Financial Ombudsman Service or compensation schemes.