The Financial Conduct Authority (FCA) has imposed a £3.5 million fine on Coinbase’s CB Payments Limited (CBPL) for facilitating crypto trading services for high-risk customers.
CBPL does not directly handle crypto transactions; rather, it serves as a gateway for users to make trades through other entities in its group. In 2020, due to concerns regarding its financial crime control framework, CBPL agreed to a voluntary requirement that barred it from accepting new high-risk customers.
However, the FCA found that CBPL went ahead and onboarded or provided e-money services to 13,416 high-risk customers. Approximately one-third of these customers deposited $24.9 million, which was subsequently withdrawn and used for crypto transactions through other Coinbase entities, amounting to around $226 million.
The FCA pointed out that CBPL’s shortcomings stemmed from inadequate care and diligence in designing, testing, implementing, and monitoring the controls meant to enforce the voluntary requirement effectively. Therese Chambers, the FCA’s joint executive director for enforcement and market oversight, stated, “The money laundering risks associated with crypto are obvious, and firms must take them seriously. Companies like CBPL that facilitate crypto trading need robust financial crime controls. Unfortunately, CBPL’s controls exhibited significant weaknesses, highlighting the necessity for the imposed requirements. Repeated violations of these requirements increased the risk of misuse by criminals for laundering illicit funds. We will not tolerate this laxity, which threatens the integrity of our markets.”