TikTok, a popular social media platform, has recently come under fire for allegedly operating as an unlicensed crypto exchange in the UK. The accusation was made in a letter sent to the Financial Conduct Authority (FCA) by a former compliance consultant for a prominent private bank.
According to Financial News, the letter asserts that TikTok’s virtual currency can be indirectly converted into fiat through the platform’s reward system. This has led to calls for TikTok to be subject to the FCA’s anti-money laundering and terrorist financing regulations.
The letter claims that TikTok, through its rewards program, is facilitating the transmission of money to money service businesses and engaging in the exchange of cryptoassets for fiat or vice versa. This lack of regulation could leave the app vulnerable to illicit activities and money laundering.
Despite these allegations, it is important to note that there is ambiguity surrounding the classification of TikTok Coins as cryptocurrency, as they are often referred to as “virtual coins” or “virtual tokens.” The identity of the compliance expert who raised these concerns remains undisclosed, described only as a former compliance officer at a leading private bank and asset manager.
TikTok has faced similar scrutiny in other jurisdictions, such as Australia, where it was referred to the country’s AML authority. The platform is taking steps to address these concerns by hiring additional compliance staff. In the United States, TikTok is also facing legal action in Utah for allegedly facilitating money laundering through its reward system and enabling the exploitation of minors.
This situation highlights the importance of proper regulatory oversight in the crypto industry to prevent misuse and illicit activities. By ensuring compliance with AML regulations, platforms like TikTok can protect both their users and the integrity of the crypto market.
