Coinbase UK subsidiary fined $4.5M for insufficient money laundering controls

CB Payments Limited (CBPL), a subsidiary business under the Coinbase Group, has been fined $4.5 million by the UK’s Financial Conduct Authority for inadequate anti-money laundering controls.

CBPL is a regulated electronic money institution (EMI) that serves as a gateway for UK customers to trade crypto assets between entities in Coinbase Group.

In late 2020, it agreed to improve its anti-money laundering controls and not accept high-risk customers in the UK after the FCA issued a warning.

However, the financial watchdog claims that CBPL subsequently provided e-money services to roughly 13,000 “high-risk” customers — receiving about $24.9 million from 31% of these customers — in a timespan of two years.

“CBPL’s controls had significant weaknesses and the FCA told it so, which is why the requirements were needed. CPBL, however, repeatedly breached those requirements,” Therese Chambers, FCA’s joint executive director of enforcement and market oversight, said.

Coinbase pushed back in a blog post, claiming that its business had “…unintentionally onboarded some customers between Oct. 30, 2020, and Oct. 1, 2023, (representing 0.34% of customers on-boarded) who were classified as high-risk.”

This marks the first time the FCA has taken an enforcement action against a crypto-related business under the 2011 Electronic Money Regulations. The regulation is generally designed to regulate smaller companies in the business of digital payment services.

Because CBPL agreed to “resolve the matter,” the FCA noted that the firm qualified for a 30% discount on its fine.

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