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Coinbase’s UK subsidiary has been fined 3.5 million pounds ($4.5 million) by British regulators for breaching an agreement that aimed to prevent the cryptocurrency exchange from onboarding high-risk clients.
The Financial Conduct Authority (FCA) imposed the fine on CB Payments Limited (CBPL), a branch of the Coinbase Group, which operates a global crypto trading platform. The fine comes after CBPL violated a voluntary agreement made in October 2020 to avoid taking on high-risk customers and offering them services.
The FCA reported that CBPL served 13,416 high-risk customers despite the agreement, with 31% of these clients depositing approximately $24.9 million. These funds were used to make withdrawals and conduct cryptocurrency transactions across other Coinbase entities, amounting to about $226 million.
Therese Chambers, joint executive director for enforcement and market oversight at the FCA, criticized CBPL’s inadequate controls, stating, “CBPL’s controls had significant weaknesses and the FCA told them so, which is why the requirements were necessary. CPBL, however, has repeatedly breached those requirements. This has increased the risk that criminals could use CBPL to launder the proceeds of crime. We will not tolerate such laxity, which jeopardizes the integrity of our markets.”
Coinbase responded by emphasizing its commitment to compliance and noted the FCA’s acknowledgment of its proactive efforts to enhance regulatory controls. The company stated, “CBPL continues to proactively enhance its controls to ensure compliance with its regulatory obligations. In its notification, the FCA acknowledged this and CBPL’s cooperation with its investigation.”
CBPL explained that the onboarding of high-risk customers between October 30, 2020, and October 1, 2023, was inadvertent and accounted for only 0.34% of its total new customers acquired during that period.
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