UK Law and Practice Contributed by: James Burnie, Kathryn Dodds, Olga Antonova and Holly Joseph, gunnercooke llp
2.15 Financial Action Task Force Standards
regulated. Furthermore, the FCA may seek to exercise oversight in respect of the unregulated aspects of the business, both in terms of: • any risk the unregulated activities could pose to regulated activities; and • the FCA’s expectation that regulated firms uphold a certain standard of conduct, even in respect of unregulated business. 2.14 Impact of AML and Sanctions Rules Generally, AML and Sanctions Rules are well settled for more most fintechs. However, there are two areas worthy of particular consideration. Firstly, the AML and Sanctions Rules which apply to crypto-asset firms are considered some of the most onerous internationally, and historically this has meant that such firms have tended to locate outside of the United Kingdom and thereby fall outside the regime. On the other hand, further regulation of the financial promotion of certain crypto-assets may impact this trend as they make it harder to operate with the UK market generally without obtaining an FCA registration and complying with the full AML and Sanctions Rules. Also, whilst the AML and Sanctions Rules for payment services firms are well established, it is suggested that there may be better ways of obtaining the outcomes of such rules, with less inconvenience to the customer, through the use of new innovations. As such, particularly as the UK has greater freedom to amend its AML and Sanctions Rules post Brexit, it may be that there are changes to these rules in the future as part of making the UK financial services sector more competitive.
Anti-money laundering and sanctions rules fol - low the standards imposed by the Financial Action Task Force. 2.16 Reverse Solicitation Whilst the position is complex, in practice, reverse solicitation does not practically exist in the United Kingdom, and reverse solicitation certainly cannot be used as a way of marketing regulated products into the United Kingdom. The restrictions on financial promotions apply to any communication that is capable of having an effect in the United Kingdom. Whilst there is an exemption to the financial promotion restriction, the exemption is very narrowly defined, and for example it can only be of relevance to corpo - rate customers or others who are acting in the course of business. Furthermore, there is a fun - damental concern regarding how the customer knows to ask about the relevant product if there had been no prior promotion of it – which prac - tically means that it is difficult to get comfort - able that this exemption can be of real use. The use of reverse solicitation is therefore generally avoided. 3. Robo-Advisers 3.1 Requirement for Different Business Models There is a single regulated activity of giving investment advice, which applies to certain asset classes such as securities. All in-scope assets are regulated under the same set of rules and requirements.
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