The Financial Conduct Authority has proposed identifying enhanced due diligence on crypto transfers involving personal, or unhosted, wallets as good practice in nonbinding guidance. The FCA opened consultation CP26/38 on October 23 to seek views on revisions to the Financial Crime Guide. The consultation accepts responses until December 24, 2026. The proposals cover firms' transfer assessments and financial-crime controls.
Draft section FCG 3.2.8 presents enhanced due diligence, or more intensive checks, on transactions involving unhosted wallets as an example of good practice. For crypto sent from a personal wallet to a UK firm, the example addresses the receiving firm's checks on the transfer. The FCA says the Guide sets no rules and creates no additional requirements. However, the FCA expects firms to read and consider the Guide when designing effective controls. A departure from the guidance alone would not establish that a firm had breached FCA rules.
Draft section FCG 3.2.5 classifies third-party technology use as poor practice when firms cannot explain or substantiate the technology's findings or scores. The draft also criticizes fixed limits on transaction-tracing steps, known as "hops", when those limits disregard measures appropriate to the risk. The criticism targets tracing rules that ignore risk, not numerical limits themselves.
The UK Travel Rule has required cryptoasset businesses to collect, verify and share information about transfers since September 1, 2023. The FCA says firms retain responsibility for compliance when using external suppliers. The FCA does not expect the proposed revisions to cause material increases in compliance activity or costs for consumers. The FCA also does not expect material changes to firms' products or services. The FCA characterizes the revisions as explanations of existing expectations and established practices.
The consultation applies to firms under FCA financial-crime supervision, including cryptoasset businesses covered by the Money Laundering Regulations. The FCA plans to review responses and issue feedback alongside the final Guide wording in a Policy Statement. The FCA has not given a publication date for the Policy Statement.
FCA Proposes Enhanced Due Diligence for Crypto Transfers to Personal Wallets
CryptoSlateShare
Summary
The UK’s FCA has proposed stricter CFT measures for crypto transfers to personal or unhosted wallets, outlined in nonbinding guidance. The regulator launched consultation CP26/38 on October 23, 2026, to update the Financial Crime Guide, with feedback due by December 24. The guidance pushes for stronger checks on such transactions, especially for risk-on assets. Firms are urged to improve transaction monitoring, especially when using third-party tech. The FCA also warned against relying on fixed tracing limits.
Source:Show original
Disclaimer: The information on this page may have been obtained from third parties and does not necessarily reflect the views or opinions of KuCoin. This content is provided for general informational purposes only, without any representation or warranty of any kind, nor shall it be construed as financial or investment advice. KuCoin shall not be liable for any errors or omissions, or for any outcomes resulting from the use of this information.
Investments in digital assets can be risky. Please carefully evaluate the risks of a product and your risk tolerance based on your own financial circumstances. For more information, please refer to our Terms of Use and Risk Disclosure.