CB Payments Limited, a part of coinbase

coinbase [email protected] Centralised Exchange

Group, has been fined just over 3.5 million British pounds ($4.5 million) by the Financial Conduct Authority for ‘repeatedly breaching a requirement that prevented the firm from offering services to high-risk customers.’

Coinbase UK Branch Breaches Agreement With FCA

In October 2020, Coinbase’s UK branch, CBPL, agreed to a voluntary arrangement with the FCA, which restricted CBPL from accepting new customers identified as ‘high-risk’ by the regulator and it also barred the company from providing services to those individuals. The arrangement was aimed at reducing the risk of money laundering, maintaining market integrity, and preventing potentially illegal activities on the CBPL platform. 

Despite this, the FCA found CBPL onboard and serve 13,416 ‘high-risk customers’. “Approximately 31 percent of these customers deposited around $24.9 million. These funds were used to make withdrawals and execute multiple crypto asset transactions via other Coinbase Group entities, totaling approximately $226 million”, stated the regulator. 

CBPL’s Continual Violations

Therese Chambers, joint executive Director of Enforcement and Market Oversight at the FCA said, “The money laundering risks associated with crypto are obvious and firms must take them seriously. Firms like CBPL that enable crypto trading need to have strong financial crime controls. CBPL’s controls had significant weaknesses and the FCA told it so, which is why the requirements were needed. CBPL, however, repeatedly breached those requirements.” 

“This increased the risk that criminals could use CBPL to launder the proceeds of crime. We will not tolerate such laxity, which jeopardizes the integrity of our markets”, the regulator emphasized. 

Coinbase’s Acknowledgement

Coinbase acknowledged the FCA’s findings and reaffirmed its commitment to regulatory compliance. “CBPL continues to actively enhance its control systems to meet regulatory requirements. The FCA also recognized CBPL’s cooperation in its investigation,” the exchange stated, according to a CNBC report.

CBPL clarified that it had ‘unintentionally onboarded’ some high-risk customers between October 30, 2020, and October 1, 2023, accounting for just 0.34% of the total new customers signed up. 

This news had an immediate impact on the crypto exchange’s stock. The COIN stock was down 1.94% at $240.31 in the U.S. premarket trading session on Thursday, July 25.

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