A UK regulator fined Coinbase £3.5 million for having "high-risk" customers

Coinbase penalised £3.5 million by UK regulator for 'high-risk' users

Coinbase fined by UK

The UK's financial watchdog has fined cryptocurrency exchange Coinbase £3.5 million for offering payment services to over 13,000 "high-risk" customers. This is the regulator's first enforcement action against a business that facilitates bitcoin trading.

CB Payments Ltd., a subsidiary of Coinbase, was fined by the Financial Conduct Authority on Thursday for "repeatedly breaching a requirement that prevented the firm from offering services to high-risk customers." consumers who were politically exposed, on sanction lists, or self-declared jobless were considered high-risk consumers.

In sharp contrast to the US financial authority, which has been pursuing digital asset companies aggressively in recent years, the FCA's sanction is the first that it has imposed on a company that processes payments for cryptocurrency trading. The Securities and Exchange Commission penalized the creator of the defunct cryptocurrency firm Terraform Labs more than $5 billion earlier this year in its most recent significant punishment.

"Companies need to take the money-laundering risks associated with cryptocurrency very seriously," stated Therese Chambers, the FCA's joint executive director of enforcement and market oversight. "Significant weaknesses" in CBPL's safeguards "increased the risk that criminals could use CBPL to launder the proceeds of crime," the speaker continued.

In October 2020, Coinbase's payments subsidiary voluntarily engaged into a "voluntary requirement" with the FCA because to "concerns about the effectiveness" of its framework for combating financial crime, according to the regulator. This contract stopped the business from accepting clients who posed a risk.

Nonetheless, the FCA claimed that CBPL continuously let disputed clients to utilize its services in the three years that followed the agreement due to its "lack of due skill, care and diligence" in adhering to the requirement. 13,416 high-risk consumers were onboarded by CBPL and/or received its services, according to the FCA. Of those, roughly 31% deposited a total of roughly $24.9 million, which was utilized to conduct $226 million in cryptocurrency exchanges and withdrawals through other Coinbase businesses.

Listed on the Nasdaq One of the largest cryptocurrency exchanges in the world, Coinbase lets institutional and retail traders buy and sell digital tokens. An e-money group with FCA authorization is CBPL.

"We are always willing to acknowledge when we fall short, and to make improvements — which is what we have done here," Coinbase said in a statement. "We take the FCA's findings and our broader regulatory compliance very seriously," the company added.

The number of high-risk users of Coinbase's services, according to Coinbase, accounted for 0.34 percent of all users "onboarded" by CBPL during the course of the three-year period.