UK's FCA proposes that crypto firms use blockchain analytics and apply extra checks around mixers, in a financial-crime guide rewrite a year before its October 2027 regime

Britain's markets regulator has set out what it proposes to expect of crypto firms on money laundering. The Financial Conduct Authority on Friday, October 23, published CP26/38, a consultation on updates to its Financial Crime Guide, with proposed changes covering fraud, cryptoassets, financial and trade sanctions, proliferation financing, data security, financial crime systems and controls, and money laundering and terrorist financing. The consultation closes on December 24, 2026, and the FCA will publish feedback and the final text in a policy statement.

The crypto chapter anticipates the regime that starts on October 25, 2027, when firms carrying out certain cryptoasset activities in the UK will need FCA authorisation; the FCA says the guidance is also relevant to firms registered today under the Money Laundering Regulations. Citing the 2025 National Risk Assessment, which rates crypto's money-laundering risk as high, the draft lists blockchain analytics in source-of-funds checks and on-chain monitoring for irregular patterns and off-ramping as good practice, and making no use of data or blockchain analytics in ongoing monitoring as poor practice. It says firms should consider enhanced due diligence where customers or transactions involve unhosted wallets, mixers, tumblers or privacy coins, and it flags rigid rules on how many transaction hops to trace as poor practice. Travel-rule procedures must cover missing originator and beneficiary data, with persistent failures reported to the FCA.

Stablecoins and AI get their own lines. UK-authorised issuers should carry out customer due diligence at onboarding and redemption, and the draft says issuers should not pay out a redemption until their financial-crime checks are done. Firms that lean on AI or third-party tools for monitoring must keep them under governance and testing and remain accountable for the results. The fraud chapter cites UK Finance data showing investment-fraud cases up 26% and losses up 40% between 2024 and 2025.

What happens next: comments are due by December 24, with a policy statement to follow.