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Cryptoassets used for criminality could be seized under new UK rules

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The UK government could bring forward legislation that would allow it to seize cryptoassets that have been used for suspected criminal purposes.

The Treasury Committee, which is formed from a cross-party group of MPs, said that swift seizure of cryptoassets from criminals could help to dampen further illegal activities as the proceeds of crime are increasingly held in cryptocurrency wallets.

The Financial Conduct Authority (FCA) and the Treasury submitted responses to the Committee’s Economic Crime report that was published earlier in the year. They said that cryptoasset firms could be made to register for anti-money-laundering purposes or face sanctions.

“If, as we recommend, the government renews the Economic Crime Plan in 2022, it should consider instituting measures specifically to protect consumers from fraud and scams relating to cryptoassets,” the FCA said.

The Treasury also said that greater efforts to tackle money laundering through cryptoassets could help to bolster confidence in the UK as a safe place to start and grow a business in the burgeoning sector.

In response to other suggestions in the report, the FCA recommended that online firms should be “proactive rather than reactive” in removing advertising and other content from their platforms that is designed to lead users into financial scams.

The government was also urged to “seriously consider” whether online giants should reimburse those who fall victim to scams on their platforms.

Last year, the insurer Aviva said that the UK’s upcoming Online Safety Bill should include greater consumer protections to stop search engines promoting financial scams in their results.

Mel Stride MP, chair of the Committee, said: “While it’s welcome news that the government has now decided to legislate against online fraudulent advertisements in the Online Safety Bill, introducing new legislation takes time, and, in the meantime, innocent consumers remain at risk of falling victim to scammers. Online platforms must now step up and urgently take down these fraudulent adverts.

“The government has stated that lots of work on combatting fraud is in train, and it places much emphasis on its upcoming Economic Crime Bill. However, it appears to dismiss our recommendation for the creation of a single law-enforcement agency with responsibility for fighting fraud and a single government department tasked with overall responsibility in this area. This may be a significant missed opportunity.”

While the government has already backed a recommendation to require online platforms like Google and Facebook to proactively tackle fraudulent advertising for financial products, it expected to take time for the legislation to pass through parliament and become law.

"We are working closely with technology companies and partners in law enforcement and civil society to consider every possible option to support victims of online fraud and to mitigate the harm that they have experienced," the government said.

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