- Coinbase Group subsidiary CB Payments Limited (CBPL) has been fined $4.5 million by the FCA for bringing in high-risk customers.
- The breach occurred despite a 2020 agreement to stop taking on high-risk clients.
- This is the FCA’s first action against a cryptocurrency company under the 2011 Electronic Money Regulations.
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.
The enforcement marks the FCA’s first action against a cryptocurrency company under the 2011 Electronic Money Regulations.
CBPL fined $4.5 million for high-risk customer breaches
Despite being under a voluntary agreement with the FCA to stop onboarding high-risk clients, CB Payments Limited (CBPL) allowed 13,416 high-risk customers to utilize their platform. These customers deposited $24.9 million and engaged in transactions totaling $226 million through other Coinbase entities, leading to a significant breach.
What’s more concerning is that CBPL failed to implement adequate controls to comply with the agreed voluntary requirements, as highlighted by the FCA’s investigation. This negligence allowed the breaches to go undetected for almost two years, raising concerns of potential money laundering activities.
Consequences for Coinbase affiliate and the wider cryptocurrency industry
Following the FCA’s action, Coinbase responded by emphasizing its commitment to regulatory compliance and vowed to strengthen its controls. Despite receiving a 30% discount on the fine for early resolution, CBPL’s repeated violations serve as a warning to other cryptocurrency companies.
The FCA’s decisive enforcement action underscores the importance of robust financial crime controls in the cryptocurrency space. Businesses that fail to implement adequate measures to prevent financial crimes will face heightened scrutiny and potential enforcement actions, signaling a new era of regulatory oversight in the industry.
Implications for the future of cryptocurrency exchanges in the UK
The FCA’s fine against CBPL not only serves as a cautionary tale for companies operating in the cryptocurrency sector but also signals increased regulatory scrutiny for other exchanges in the UK. This landmark enforcement action urges platforms to reassess their compliance frameworks and prioritize financial crime controls to avoid facing similar penalties in the future.
