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UK authorities claim that TikTok was involved in illegally selling cryptocurrencies as an unregulated trading platform. British compliance expert claims that TikTok is an unauthorised crypto trading platform and attracts the attention of the FCA. TikTok is in hot water over its failure to implement AML controls for its virtual currency system as money laundering rebounds as a potential issue. Tensions around the world rise for TikTok as it is involved in financial misrepresentation investigations in the UK and Australia.
TikTok has since been put under the spotlight after being alleged to be exposed to be operating as an unauthorised cryptocurrency platform in the UK. The allegations were made public by the office of the US attorney in a letter to the management of the UK’s Financial Conduct Authority (FCA) from a former compliance consultant of a top private bank.
In the letter, TikTok said the process let people potentially earn enough coins to swap for fiat — and arguably did not meet the related rules.
UK Exposes TikTok As Potential Unregulated Crypto Platform
The concerns arise for its virtual currency known as TikTok Coins, through which users can spend money and send similar virtual gifts to the individuals who create the content. These gifts are then converted into diamonds, which creators can cash out for Real Money according to the company.
However, the former compliance consultant notes that this system means that businesses can engage in the transmission of money and trading of other crypto-like assets without being properly licensed by the FCA.
Since the current structure of TikTok is high risk, the letter suggests that the UK should regulate it under the anti-money laundering and terrorist financing law Act. The concerns indicate that TikTok can enable transactions aimed at avoiding regulation, especially converting digital currencies for fiat money.
Criticism of AML Regulation
The complaint also contends that TikTok may not even have appropriate AML systems in the first place. In the letter to the P2P business, the FCA also threatened that the platform may be utilized for money laundering or some other unlawful purpose, in case it is not registered with the FCA.
However, if the FCA intervenes, there may be an audit of the financial transactions of the platform, especially as regards the virtual currency system, the rules governing the use of digital currencies, and money transmission services.
As seen, TikTok coins cannot be categorized as cryptocurrency per se; nevertheless, the use of such tokens for the exchange of other virtual assets followed by the exchange of other fiat money has stirred disputes regarding legal provisions for tokens. This lack of clear structure of the system brings the following issues with the application of TikTok nursing the current laws on finance in the UK.
Former Legal Analysis and Investigations
Even so, TikTok has faced legal challenges before too. It is also facing a probe in Australia where the authorities would prefer the platform to explain how money laundering dangers are addressed. The Australian Transaction Report and Analysis Centre or AUSTRAC is currently probing claims that through TikTok’s payment platform, it facilitated the transfer of money from the purported crimes, especially after Turkey stated that it discovered large transactions on TikTok as connected with criminality. Such allegations have led to increased scrutiny from regulators all over the world.
In addition, the application has been blocked and even has legal sanctions in many countries including the USA. It was shut down by the US authorities, which was an important reason for it was the question about the protection of users’ privacy and their data. The US presidential candidate Robert F. Kennedy Jr has spoken against the ban calling it an anti-freedom move and dismissing the government’s concerns as unfounded.
There has been no statement from TikTok regarding the latest accusations from the United Kingdom. In previous cases, the platform has also outrightly dismissed any special participation in any unlawful incidences while elaborating on compliance with the country’s existing laws. A representative for the company has said that TikTok understands its legal responsibilities and has measures to ensure that the finances section in the app will not be misused.
