Regulation
Coinbase fined $4.5 million for ‘high-risk’ customers
Coinbase was fined $4.5 million by a British regulator for serving “high-risk” customers.
The fine, announcement Thursday (July 25) by the Financial Conduct Authority (FCA) has been imposed on a subsidiary of cryptocurrency exchange CB Payments Limited (CBPL), which the FCA said repeatedly breached a requirement preventing the company from doing business with high-risk customers.
“The money laundering risks associated with cryptocurrencies are clear and businesses need to take them seriously,” Therese Chambersco-executive director of enforcement and market surveillance at the FCA, said in a press release.
“Companies like CBPL that enable cryptocurrency trading must have robust financial crime controls in place. CBPL’s controls had significant weaknesses and the FCA brought this to their attention, which is why these requirements were necessary. However, CPBL has repeatedly breached these requirements.”
According to the FCA, CPBL agreed not to accept new high-risk clients in 2020 after the regulator raised concerns about the firm’s financial crime control network.
But despite this agreement, the FCA said, CBPL onboarded and/or provided e-money services to 13,416 high-risk customers, who conducted multiple crypto asset transactions through other Coinbase Group entities, totaling approximately $226 million.
The FCA said CBPL had demonstrated a “lack of skill, care and diligence in the design, testing, implementation and monitoring” of its financial controls, with “repeated and significant breaches” going undetected for almost two years.
“We take the FCA’s findings and our broader regulatory compliance very seriously and CBPL continues to proactively enhance its controls to ensure compliance with its regulatory obligations,” Coinbase said in a statement. statement published on his blog.
The FCA notes that this action was taken under the UK’s Electronic Money Regulations 2011 and marks the first time the regulator has taken enforcement action using these powers.
The fine comes as the need to clear regulatory frameworks remains one of the most pressing issues facing the crypto space, as PYMNTS wrote earlier this month.
“Clear regulations can protect consumers, reduce fraud, and encourage institutional investment, while regulatory uncertainty or overly restrictive regulations can stifle innovation and hamper technological advancements, lead to market instability, and push companies to more crypto-friendly jurisdictions,” the report said.
The report added that the U.S. Securities and Exchange Commission (SEC) and other regulatory agencies are working on frameworks for cryptocurrenciesbut there is still considerable uncertainty, as Europe Crypto-asset markets (MiCA) The regulation provides a more unified regulatory approach.
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