FCA and Partners Disrupt Illegal Peer-to-Peer Crypto Trading in London With Cease and Desist Letters

Key Takeaways

• The FCA, working with HMRC and the Metropolitan Police Service, issued cease and desist letters at 3 London premises suspected of running unregistered peer-to-peer crypto businesses under the Money Laundering Regulations 2017.
• The FCA states that no peer-to-peer crypto businesses are currently registered in the UK, so any counterparty doing this by way of business is presumptively unregistered.
• Compliance teams should treat this as a signal of sustained enforcement and reassess exposure to such counterparties.

Deep Dive

The FCA, working with HMRC and the Metropolitan Police Service, issued cease and desist letters at 3 London premises suspected of running unregistered peer-to-peer crypto businesses under the Money Laundering Regulations 2017. The FCA states that no peer-to-peer crypto businesses are currently registered in the UK, so any counterparty doing this by way of business is presumptively unregistered. Compliance teams should treat this as a signal of sustained enforcement and reassess exposure to such counterparties.

The operation took place on 10 September 2026 and follows similar action in April. Evidence gathered in April is now supporting criminal investigations and other enforcement action. The FCA's track record also includes prosecuting the operator of an unlawful crypto ATM network and supporting the arrest of two people suspected of running an illegal crypto exchange. Together, these actions show a pattern of escalation from disruption toward prosecution. Steve Smart's statement that unregistered operators "should assume we are looking at them" reinforces that the FCA intends to continue.

The legal basis is the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Anyone buying and selling crypto directly with others by way of business in the UK must be registered with the FCA for AML purposes. The FCA states that no peer-to-peer crypto businesses are currently registered, which means any such activity in the UK is likely unlawful. The release identifies the core risk: unregistered traders sit outside the controls designed to detect and prevent money laundering, giving criminals a route to move illicit funds. The release introduces no new rules. It clarifies the FCA's enforcement posture under the existing regime.

For the timeline, the notes to editors state that crypto remains largely unregulated in the UK, except for AML and financial promotion rules, until October 2027. Firms should therefore expect the broader cryptoasset regime to arrive after that date. Until then, AML registration and financial promotion compliance are the primary enforcement levers, and the FCA is actively using them.

Recommended actions for compliance professionals:
- Review customer and counterparty populations for unregistered peer-to-peer crypto traders. Use the FCA Firm Checker and the FCA Register as part of due diligence.
- Strengthen transaction monitoring typologies for flows to and from suspected unregistered peer-to-peer traders, including repeated crypto exchange on-ramp and off-ramp activity, cash deposits linked to crypto sales, and rapid movement of funds across accounts.
- Ensure suspicious activity reporting procedures cover these scenarios. Retain evidence, because law enforcement is using prior operation evidence in ongoing cases.
- Update staff training and risk assessments to reflect the FCA's stated focus.
- Confirm that any marketing or promotion of crypto complies with financial promotion rules.

The risk implications are significant for banks, payment firms, and crypto businesses that service these traders, whether knowingly or through weak controls. Possible consequences include regulatory scrutiny of AML systems, enforcement action, criminal exposure, reputational damage, and account de-risking decisions. The multi-agency approach (FCA, HMRC, Metropolitan Police) suggests that information sharing and intelligence-led targeting will continue, so firms should expect more production orders and information requests. The release does not state any financial penalties for the 3 premises. The cease and desist letters are an interim disruption measure, with further enforcement possible.

Source: Financial Conduct Authority