The short-form video app, TikTok faces examination for allegedly trading like a cryptocurrency exchange in the UK.
A compliance expert has brought this to the notice of the Financial Conduct Authority, suggesting that the famous TikTok coins might be being used for money laundering and terrorist financing.
TikTok Coins are the virtual currency launched by the social media platform causing concern among netizens. The rumours of these coins being purchased with real money, and being given to users on the app during livestreams are doing the rounds. What's worrisome, though, is that these can be converted back into cash, similar to a cryptocurrency transaction type.
That has, in turn, raised regulatory concerns as the UK is putting strict regulations on crypto businesses. Such transactions also raise concerns over the safety of personal financial data, especially during times of heightened geopolitical tensions.
“TikTok via its rewards program is facilitating money transmission to (money service businesses) and exchanging or arranging or making arrangements with a view to the exchange of, crypto assets for money or money for crypto assets.” the compliance expert's letter has reportedly stated.
The FCA and TikTok have remained silent on the issue until now. One of the compliance consultants suggests that the buying source of the TikTok Coins is ambiguous. Thus, it is operating without registration in the anti-money laundering regime.
Consultants have further rung alarm bells for TikTok as by applying the FCA's definition of a money service business, the firm would be subjected to anti-money laundering and counter-terrorism laws, including registration and reporting obligations to relevant regulators.
The regulatory bodies have targeted crypto companies that were not in compliance with the new financial promotion rules set in place since last October. More than one thousand warnings have thus been issued in curbing unregistered crypto entities from promoting illegal services in the UK.
The regulator had rejected 87% of the applications of crypto companies, thereby the chances of TikTok becoming a legitimate crypto company also look bleak.