When record keeping is challenged in an inspection: what to do first
When an inspector challenges your record keeping, stop reconstructing files from memory. Freeze the current record set, log the exact wording of the question raised, and identify who signed off on the transfer or onboarding record in dispute. The clock on your reply starts at the moment the challenge is raised, not when you finish gathering documents.
Basis
Record-keeping duties for crypto-asset service providers rest on two directly applicable EU instruments: Regulation (EU) 2023/1114 (MiCA) and Regulation (EU) 2023/1113 (TFR). MiCA sets the operating conditions a licensed provider must meet, including how client and transaction records are kept. TFR sets the information that must travel with a transfer of funds or crypto-assets, and the records a provider must be able to produce on request. Both instruments have applied since 30 December 2024.
Practical consequence
A challenge to your record keeping does not, by itself, suspend an authorisation. It does start a clock. Most supervisory procedures require a documented response within a fixed number of working days, and a missed reply deadline is treated as a separate failure on top of the original finding.
If the inspection coincides with a change in the entity's ownership, the two tracks run separately. The approval process described in When a shareholder change requires approval: what to do does not pause because a record-keeping question is open, and the reverse is also true.
What to do first
- Compliance officer: freeze the exact record set named in the inspector's letter before anyone edits or supplements it.
- Compliance officer: write down the precise wording of the challenge and the date it was raised.
- Records custodian: locate the original onboarding or transfer file and confirm who created and approved it.
- Legal counsel: check the deadline stated in the inspector's letter and calendar it that same day.
- Management: if the entity has recently undergone a group restructuring, confirm which entity now holds the underlying records; see When a group restructuring moves the rights for the mechanics of that handover.
- Compliance officer: draft a written response addressing the specific gap raised, not the file as a whole.
Who decides, and by when
The inspecting authority decides whether the record-keeping gap is closed, escalated to a formal finding, or referred for sanction. The sequence below is the usual pattern; it does not state a fixed supervisory deadline, because none is set out for this specific step in the underlying instruments.
| Stage | Who acts | What happens |
|---|---|---|
| Challenge raised | Inspector | Specific gap identified in writing |
| Response | Compliance officer | Written reply addressing the gap |
| Review | Inspecting authority | Gap closed, escalated, or referred |
| Escalation, if any | Supervisory board or equivalent forum | Formal finding or sanction procedure opens |
Forks
If the challenged record concerns a transfer of crypto-assets rather than an onboarding file, the relevant reference point is TFR, and the missing element is usually the originator or beneficiary data that should have travelled with the transfer.
If the underlying evidence sits with an external processor and that processor has recently changed its hosting region, confirm the current location and retrieval route before promising a date; see When a hosting provider changes region for the questions to ask first.
If the challenge follows a missed procedural deadline elsewhere in the business, treat the two as separate files with separate clocks; the logic in When a validation deadline was missed applies to that deadline question, not to the record-keeping question itself.
Limit
This page does not draft the response letter, does not calculate a specific deadline for your file, and does not tell you whether a given gap amounts to a breach. Those questions depend on the inspector's exact wording and on the record actually in dispute.
Verified
Checked against Regulation (EU) 2023/1114 (MiCA) and Regulation (EU) 2023/1113 (TFR), both in force since 30 December 2024. Last checked: 14 January 2025.
FAQ
What is the first step when record keeping is challenged in an inspection?
Freeze the exact record set named in the challenge before anyone edits it, then write down the inspector's wording and the date the challenge was raised.
Which deadline is already running?
The deadline for a written response, as stated in the inspector's letter. It starts running when the challenge is raised, not once the file is complete.
Who decides, and on what evidence?
The inspecting authority decides, based on the written response and the original record, whether the gap is closed, escalated, or referred further.
Related publications
A separate onboarding question is addressed in When onboarding is fully automated, which covers the record-keeping expectations that apply before any transfer takes place.
Next step
If an inspector has already raised this question about your files, a partner responds within minutes during business hours, and a written assessment follows within one working day.