Coinbase Subsidiary Fined $4.5 Million for High-Risk Customer Breaches
In a landmark decision, the UK’s Financial Conduct Authority (FCA) fined UK-based Coinbase subsidiary CB Payments Limited (CBPL) £3.5 million ($4.5 million) for repeated breaches of anti-money laundering regulations. This enforcement marks the FCA’s first action against a cryptocurrency company under the 2011 Electronic Money Regulations.
Agreement with FCA to Stop Onboarding High-Risk Customers
In October 2020, CB Payments Limited (CBPL) entered into a voluntary agreement with the FCA to stop onboarding high-risk customers in an effort to strengthen financial crime controls. Despite this agreement, CBPL continued to admit 13,416 high-risk customers, leading to significant breaches and financial transactions totaling millions of dollars.
Importance of Financial Crime Controls in Cryptocurrency Space
The FCA’s action against CBPL serves as a warning to cryptocurrency companies regarding the importance of implementing robust financial crime controls. Kate Gee, an expert on cryptocurrency disputes, emphasized the need for companies to comply with anti-money laundering obligations to prevent money laundering risks in the industry. Failure to adhere to these regulations may result in enforcement action and increased scrutiny from regulatory authorities.
Overall, the fine imposed on CBPL highlights the significance of maintaining strong financial crime controls and signals a potential shift towards stricter compliance measures for cryptocurrency exchanges operating in the UK. The FCA’s decisive action may prompt other platforms to reassess their compliance frameworks to avoid similar penalties in the future.
