For AML compliance teams in regulated UK businesses, cryptocurrencies introduce a new layer of risk that traditional frameworks weren’t built to handle. You’re dealing with technology that’s fast, complex, and often anonymous by design.

The first thing you need to know is that crypto isn’t inherently criminal. It’s simply a tool – just like cash or bank accounts. But the features that make it appealing to users also make it attractive to criminals: pseudonymity, ease of access, and limited oversight on some platforms.

If your business touches crypto in any way – whether through customer transactions, partnerships, or exposure via third parties – it’s important to build a risk-based approach. Start by understanding the types of crypto assets your customers interact with. Bitcoin is traceable. Monero isn’t. Ethereum transactions are public, but DeFi protocols may be built to obscure flows of funds.

Monitoring needs to evolve too. The typical red flags for fiat – sudden large deposits, unusual payment patterns – won’t always translate directly to crypto. You’ll need to consider wallet history, risk profiles, transaction frequency, and whether a customer is interacting with known high-risk jurisdictions. 

Know Your Customer (KYC) becomes more complicated when your customers are interacting with decentralised protocols or holding assets in self-custodied wallets. The traditional approach of verifying identity and source of funds doesn’t easily apply when there’s no bank account or official channel involved. In these cases, your onboarding needs to be sharper, your monitoring smarter, and your risk appetite clearly defined and documented.

It’s also worth staying close to the regulatory environment. The FCA has taken a clear stance on certain types of crypto activity, and guidance is evolving quickly. You don’t want to be caught off guard. If your customers are engaging in crypto, even tangentially, you may be exposed to risks you hadn’t considered.

What’s needed is a cultural shift inside compliance functions. Crypto can’t be treated as an edge case anymore. It’s becoming embedded in mainstream financial activity, and pretending it’s niche or temporary is risky. Train your team. Build playbooks. Define thresholds. Work with legal. Collaborate with fraud teams. And most of all, stay curious – because the threats are shifting, and your controls need to keep up.