Cryptocurrency firms in the United Kingdom could soon be faced with more extensive Anti-Money Laundering (AML) reporting requirements.

In a consultation paper published this month, the Financial Conduct Authority proposed broadening annual financial crime reporting obligations to include all crypto asset exchange and custodian wallet providers.

The regulator says that by extending its reporting rules to a wider range of firms, it will be able to deepen its understanding of which firms may have intrinsic money laundering risks due to their activities. 

The paper claims that the information provided through more inclusive annual reports will help the FCA’s supervisory approach in the financial sector to become more “data-led.”

Since 2016, the FCA has been seeking to use data analytics to innovate its regulatory approach and reduce the burden on enterprises, while mitigating money laundering risks to the U.K.’s financial system and ensuring its overall integrity. 

More data, according to the paper, permits a risk-based and targeted approach to financial crime supervision.

The regulator estimates that by extending reporting obligations to a wider range of firms, including crypto asset service providers, it will acquire data for an additional 4,500 firms annually. 

Reporting obligations are irrespective of firms’ total annual revenue. In their reports, businesses are required to reveal the resources they allocate to tackling financial crime and the number of suspicious activity reports they submit to the National Crime Agency.

The wider context of the FCA’s proposal is a review of the U.K.’s legislation and regulatory rules in relation to the European Union’s 5th Money Laundering Directive (5MLD), which came into force this January. Its provisions extend AML rules to specific firms in the crypto asset sector.

The U.K. has also recently amended its Anti-Money Laundering measures to reflect recommendations from the Financial Action Task Force, which go beyond 5MLD to include activities such as initial coin offerings.