Coinbase’s UK Subsidiary Fined $4.5 Million for Money Laundering Violations
The UK’s Financial Conduct Authority (FCA) has fined CB Payments Limited (CBPL), a subsidiary of Coinbase Group, £3.5 million ($4.5 million) for repeated violations of anti-money laundering regulations.
This marks the first enforcement action by the FCA against a cryptocurrency firm under the Electronic Money Regulations 2011.
Agreement to Avoid High-Risk Clients
In October 2020, CB Payments Limited entered into a voluntary agreement with the FCA to stop onboarding high-risk clients. Despite this agreement, CBPL continued to onboard 13,416 high-risk clients who deposited approximately $24.9 million, leading to $226 million in withdrawals and cryptocurrency transactions through other Coinbase entities.
The FCA’s investigation revealed significant shortcomings in CBPL’s controls to comply with the voluntary requirements (VREQ), allowing major violations to go undetected for nearly two years.
30% Discount on Fine for Compliance
Coinbase responded to the FCA’s findings by emphasizing its commitment to regulatory compliance and actively strengthening controls to ensure adherence to regulatory obligations. The FCA acknowledged CBPL’s cooperation in the investigation and granted a 30% discount on the fine for early resolution of the issue.
Warning Issued to Cryptocurrency Firms
The FCA’s action serves as a broader signal to cryptocurrency companies to fulfill anti-money laundering obligations. Failure to address financial crimes risks scrutiny and enforcement measures. The fine highlights the importance of robust financial crime controls and may lead to increased scrutiny of other cryptocurrency exchanges operating in the UK.
The FCA’s decisive actions could prompt other platforms to reassess their compliance frameworks to avoid similar sanctions.
