- Coinbase’s UK arm fined $4.5 million for breaching regulatory agreement.
- CBPL onboarded 13,416 high-risk customers, violating FCA’s restrictions.
Coinbase’s UK arm, CB Payments Limited (CBPL), has been fined £3.5 million ($4.5 million) by the Financial Conduct Authority (FCA) for breaching a voluntary agreement meant to prevent the onboarding of high-risk customers. The penalty, announced on July 25, highlights significant weaknesses in CBPL’s control mechanisms.
In October 2020, CBPL entered a voluntary agreement with the FCA that barred it from accepting or servicing customers deemed “high-risk” by the regulator. This measure was designed to reduce money laundering risks and uphold market integrity. Despite the agreement, the FCA discovered that CBPL onboarded and serviced 13,416 high-risk customers, contrary to the stipulations.
Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, criticized CBPL’s lack of effective controls. “CBPL’s controls had significant weaknesses, and the FCA had already flagged these issues. Yet, CBPL repeatedly breached the agreement,” Chambers said. She warned that these breaches increased the risk of criminal activities, including money laundering, on the platform.
What Was The Impact?
Coinbase responded by acknowledging the FCA’s findings and reaffirming its commitment to improving its control systems. “CBPL continues to actively enhance its control mechanisms to meet regulatory standards,” Coinbase stated. Meanwhile, the company also highlighted that the FCA recognized its cooperation during the investigation.
The fine has had an immediate effect on Coinbase’s stock, with shares dropping 1.94% to $240.31 in premarket trading. This enforcement action could indicate heightened regulatory scrutiny for cryptocurrency exchanges in the UK, potentially leading to more stringent oversight or a shift towards more crypto-friendly regulatory environments.
Moreover, this fine marks a notable instance of FCA enforcement under the Electronic Money Regulations 2011, potentially signaling a broader crackdown on cryptocurrency services in the UK.
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