The UK’s Coinbase subsidiary, CB Payments Limited (CBPL), has been fined £3.5 million ($4.5 million) by the Financial Conduct Authority (FCA) for multiple violations of anti-money laundering legislation.
This is the initial enforcement action carried out by the FCA following the Electronic Money Regulations 2011 against a cryptocurrency company. In October 2020, CBPL voluntarily agreed with the FCA to stop accepting high-risk customers to enhance the firm’s financial crime controls.
Nevertheless, despite the limitations, CBPL went ahead with the process of bringing on board 13,416 consumers who were considered to be at high risk. These customers deposited a total of around $24.9 million, which was then utilized for withdrawals and cryptocurrency transactions totaling $226 million through other organizations affiliated with Coinbase.
The FCA’s inquiry found that CBPL did not demonstrate sufficient competence, caution, and attentiveness in creating, testing, implementing, and overseeing procedures to adhere to the voluntary requirement (VREQ).
The organization failed to sufficiently evaluate all possible customer onboarding techniques, resulting in significant breaches that remained unreported for almost two years.
Coinbase issued a response to the conclusions of the FCA, emphasizing its strong commitment to regulatory compliance and ongoing efforts to strengthen its systems to meet all regulatory responsibilities. The FCA recognized CBPL’s collaboration in the inquiry and mentioned that the company was granted a 30% reduction on the penalty for opting to settle the issue promptly.
This penalty acts as a cautionary measure for crypto companies that lack adequate measures to prevent financial crimes, especially in the cryptocurrency industry, where the risks of money laundering are heightened.
Companies that do not adequately safeguard against financial wrongdoing and neglect to adhere to operational limitations will be subject to examination and enforcement measures.
