The $4.5 million fine could signal the start of more scrutiny for crypto exchanges in the region.
Coinbase UK fined $4.5 million for ‘high-risk’ customer onboarding
The $4.5 million fine could signal the start of more scrutiny for crypto exchanges in the region.
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Collect this article as NFTCoinbase’s United Kingdom arm was fined $4.5 million by a British regulator for breaching a voluntary agreement related to user onboarding.
In 2020, CB Payments Limited (CBPL), part of the Coinbase Group, entered a voluntary agreement with Britain’s Financial Conduct Authority (FCA) that would prevent it from onboarding customers considered ‘high risk’ by the regulator.
Yet, CBPL has allegedly onboarded 13,416 customers that the FCA considered high-risk, and offered cryptocurrency services to them, which was also prohibited by the agreement. The British regulator fined Coinbase Group’s CBPL 3,503,546 pounds ( $4.5 million), for “repeatedly breaching” the agreement.
The lack of controls raises potential money laundering risks, according to Therese Chambers, joint executive director of enforcement and market oversight at the FCA, who said in a July 25 statement:
“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. This 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.”
The British regulator’s decision could mean more scrutiny for other cryptocurrency exchanges in the region and lead to platforms seeking more crypto-friendly regulatory jurisdictions.
Is this the start of a crypto crackdown in the United Kingdom?
The British regulator’s decision could mark the start of a wider crackdown on cryptocurrency services providers in the country.
The FCA fined Coinbase’s UK arm under the Electronic Money Regulations 2011.
In a particularly concerning sign for the crypto industry, this fine marks the first instance that the FCA has taken enforcement actions based on this act.
The regulator added that the breaches went undiscovered for the past two years, due to a lack of initial monitoring practices for the firm’s voluntary agreement (VREQ)
This is a developing story, and further information will be added as it becomes available.