FCA proposes personal-wallet checks in nonbinding crypto guidance

Britain's Financial Conduct Authority has proposed treating enhanced checks on crypto transfers involving personal, or unhosted, wallets as good practice in nonbinding guidance. It also criticizes firms that cannot explain the risk scores they use.The regulator opened consultation CP26/38 on Oct. 23, seeking feedback on changes to its Financial Crime Guide until Dec. 24, 2026. The proposals address how firms assess transfers and operate their financial-crime controls.Draft section FCG 3.2.8 lists applying enhanced due diligence, meaning more intensive checks, to transactions involving unhosted wallets as a good-practice example. For someone moving crypto from a personal wallet to a UK firm, the proposed example concerns how the receiving firm checks that transfer.The proposed guidance is nonbinding. The FCA says the Guide contains no rules and imposes no new requirements, although it expects firms to read and consider it when establishing effective controls. Departing from the guidance would not, by itself, establish a breach of FCA rules.Risk scores and tracing rulesThe monitoring proposals also address how firms reach those decisions. Draft FCG 3.2.5 identifies as poor practice u...