UK Accused TikTok For Illegally Operating Digital Exchange

The UK’s Financial Conduct Authority (FCA) recently raised concerns over TikTok’s virtual currency, TikTok Coins, fearing it could be used for money laundering. The regulator warned that the platform’s reward system might enable users to bypass traditional financial regulations designed to prevent such illegal activities.

A former compliance consultant claimed that TikTok is acting like an unregistered crypto exchange in a letter sent to the FCA. The letter highlighted how TikTok’s system lets users buy virtual coins, gift them to creators, and convert them into real money, similar to cryptocurrency exchanges. It also pointed out the platform’s lack of strong anti-money laundering (AML) safeguards, potentially making it vulnerable to criminal exploitation, such as illicit money transfers.

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TikTok has faced similar accusations in other countries, including Australia and the U.S., where the platform was sued for allegedly enabling money laundering through its reward system. The key concern is that TikTok Coins, despite being labeled as “virtual tokens,” might function similarly to cryptocurrencies, raising legal and regulatory questions.

In response, the FCA acknowledged receiving the complaint but has yet to take official action. If the regulator does step in, TikTok’s financial system, particularly its virtual currency structure, could face more scrutiny and be subject to laws governing digital currencies and money transfer services. This may lead to tighter regulations on how TikTok Coins are bought, traded, and cashed out to prevent misuse for illegal activities.

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The consultant’s letter emphasized that TikTok’s current setup allows funds to move in ways that avoid traditional financial controls. With the rising use of digital assets, concerns are growing about the risks posed by platforms like TikTok that handle virtual currencies without strict regulatory oversight.

If TikTok’s operations are deemed problematic by the FCA, the platform could be forced to make significant changes to how it manages its virtual currency to comply with financial laws aimed at preventing illegal financial activities.