- A compliance consultant who had worked in the banking sector stated in the letter that TikTok ought to be subject to the UK’s money laundering and terrorist financing checks
- TikTok users are able to purchase virtual coins
- Gifts to content creators can be bought with virtual coins on TikTok
Social media app, TikTok, has been accused of operating as a cryptocurrency exchange in the United Kingdom without the requisite licence. The accusation was contained in a letter by a former compliance consultant in the UK, which was sent to the UK’s Financial Conduct Authority (FCA).
According to a recent report by Financial News, the compliance consultant who had worked in the banking sector stated in the letter that TikTok ought to be subject to the watchdog's money laundering and terrorist financing checks since virtual tokens can be indirectly converted into actual currency through the video-sharing platform's creator programme.
The letter claims that users of the social media platform are able to purchase virtual coins. Gifts to content creators can then be bought with these coins.
In the UK, Tiktok primarily operates as a social media app and has not registered with the FCA.
In recent times, the FCA has not hidden its cautious approach to the crypto industry. Last July, it fined the UK business of one of the world’s largest crypto exchanges, Coinbase, for money-laundering failures. It has also warned customers of the dangers of scams and financial loss, as well as the possibility that digital assets could be used to support money laundering and financial crime.
Financial News quoted a person familiar with the situation as saying that the regulator has increased the number of pre-application meetings it holds with companies to discuss topics like money laundering. Of the approximately 500 crypto companies that applied, 48 had been approved in the UK as of October 1, 2024.
“TikTok via its rewards programme is facilitating money transmission to [money service businesses] and exchanging, or arranging or making arrangements with a view to the exchange of, cryptoassets for money or money for cryptoassets,” the letter read.
The letter also noted that according to FCA guidelines and regulations, TikTok would be deemed to be operating a money service business and would have to abide by all applicable counterterrorism and anti-money laundering laws, including registering and informing the appropriate authorities.
“Cryptocurrencies are increasingly being used by criminals for illicit activities and money laundering. Entities such as TikTok present a risk due to non-registration without the necessary anti-money laundering, counterterrorist financing and proliferation financing systems and controls in place,” the letter read.
How US regulators earned $19 billion in settlements from crypto firms in 2024
Meanwhile, TheRadar earlier reported that in 2024 alone, crypto companies paid regulators in the United States over $19 billion in lawsuit settlements, nearly two-thirds of all settlements to date.
According to a recent CoinGecko report, most of the funds came from the bankrupt cryptocurrency exchange FTX and its affiliated trading company Alameda. In August alone, the Commodity and Futures Trading Commission (CFTC) received $12.7 billion in settlement payments.
