CB Payments Ltd. (CBPL), a company linked to the popular cryptocurrency exchange Coinbase, has been fined a hefty sum of 3.5 million pounds ($4.5 million) by the UK’s Financial Conduct Authority (FCA). The fine was imposed due to CBPL’s failure to adhere to proper controls in place to prevent high-risk customers from accessing their services.
Despite having restrictions in place, CBPL managed to onboard and provide e-money services to a total of 13,416 high-risk customers, according to the FCA. These customers deposited approximately $24.9 million, with the funds being used for withdrawals and various cryptocurrency transactions through other entities within the Coinbase group, resulting in a total of around $226 million in transactions.
The FCA first raised concerns about CBPL’s controls regarding financial crime back in February 2020 after conducting a visit to their offices. Following this, CBPL voluntarily agreed to refrain from taking on new high-risk customers until the issues were addressed. However, the breaches were not detected until almost two years later, highlighting a lack of effective monitoring of the agreed-upon controls.
In response to the fine, Coinbase emphasized its commitment to upholding high regulatory standards and expressed willingness to collaborate with regulators on compliance matters. The company acknowledged its shortcomings in this instance and stated its dedication to making necessary improvements moving forward.
It is crucial for companies operating in the cryptocurrency space to prioritize regulatory compliance and work closely with authorities to prevent lapses in control that could potentially facilitate financial crimes. By learning from this incident, Coinbase aims to enhance its practices and ensure a more robust framework for preventing the onboarding of high-risk customers in the future.
In a rapidly evolving industry like cryptocurrency, maintaining transparency, accountability, and adherence to regulatory guidelines are essential for fostering trust among users and regulators alike. Coinbase’s response to the FCA’s fine demonstrates a commitment to rectifying errors and strengthening compliance measures to uphold the integrity of the crypto ecosystem.