Coinbase UK unit fined $4.5 million by British regulator over ‘high-risk’ customer breaches
Photo Illustrating Coinbase in Suqian, Jiangsu Province, China on June 6, 2023 (Photo Illustration by Costfoto/NurPhoto via Getty Images)
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CB Payments Limited (CBPL) is part of the Coinbase Group, which operates a global crypto trading platform.
In October 2020, CBPL entered into a voluntary agreement with the U.K.’s Financial Conduct Authority (FCA), accepting restrictions that prevented it from taking on new customers that the regulator considered high-risk. It also prohibited CBPL from offering services to these customers.
However, CBPL breached the agreement and onboarded and served 13,416 of so-called high-risk customers, the FCA said. Around 31% of these people deposited roughly $24.9 million, the British watchdog added. These funds were used to make withdrawals and execute crypto transactions via other Coinbase entities, totaling approximately $226 million.
“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,” said Therese Chambers, joint executive director of enforcement and market oversight at the FCA.
“This increased the risk that criminals could use CBPL to launder the proceeds of crime. We will not tolerate such laxity, which jeopardises the integrity of our markets.”
Coinbase said in a statement that it takes the FCA’s findings and its “broader regulatory compliance very seriously.”
“CBPL continues to proactively enhance its controls to ensure compliance with its regulatory obligations. In its notice, the FCA acknowledged this as well as CBPL’s co-operation with its investigation,” the company added.
CBPL said that it “unintentionally onboarded” some customers that were classified as high-risk between Oct. 30, 2020 and Oct. 1, 2023, representing 0.34% of overall new customers that the unit signed up.
