Coinbase Payments fined $4.5 million by the UK FCA for failing to prevent money laundering

The Financial Conduct Authority (FCA) in the UK stated in a press release on the 25th that it will fine Coinbase's payment company, Coinbase Payments, $4.5 million for failing to implement anti-money laundering measures.

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Coinbase Payments Fined $4.5 Million by FCA

The Financial Conduct Authority (FCA) has fined the U.S. exchange Coinbase's subsidiary Coinbase Payments Limited (CBPL) approximately $4.5 million for insufficient anti-money laundering measures.

Reportedly, the company mainly provides trading and transfer services for cryptocurrencies within Coinbase and related applications for UK customers:

CBPL does not directly engage in cryptocurrency trading but acts as an intermediary and conduit for cryptocurrency transactions. However, the company has not registered for this business.

The FCA pointed out that the company signed a Voluntary Requirement (VREQ) in October 2020 as part of implementing anti-money laundering measures:

Nevertheless, CBPL provided electronic money services to 13,000 high-risk customers, with 31% of them depositing around $24.9 million and then executing cryptocurrency transactions worth approximately $226 million through other Coinbase services.

Therese Chambers, Director of Enforcement and Market Oversight at the FCA, emphasized that cryptocurrency companies like CBPL need robust measures to prevent financial crimes:

Money laundering risks associated with cryptocurrencies are quite common and companies involved must take them seriously. CBPL's anti-money laundering measures had significant deficiencies and repeated breaches of requirements.

Coinbase's Response: Unintentional Violations, Welcomes Regulation

In response, Coinbase stated in a blog post that the company has always been committed to compliance:

CBPL has been authorized by the FCA as an "electronic money institution" since 2017, providing electronic money and payment services to local users, but not authorized for "cryptocurrency trading." However, inadvertently, we did onboard some customers classified as high-risk from 2020 to 2023.

They added, "Those high-risk customers only account for 0.34% of the total users."

Previously, exchanges like Binance have also been fined for inadequate anti-money laundering measures, with some even facing imprisonment.

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FCA's First Enforcement Action under the 2011 Electronic Money Regulations

It is reported that this is the first time the FCA has taken enforcement action against a cryptocurrency company under the 2011 Electronic Money Regulations. As CBPL agreed to the charges, the FCA also agreed to reduce the company's fine by 30%.

However, FCA's cryptocurrency regulation has always been known for its rigor, from publishing guidelines on cryptocurrency company advertising to advancing stablecoin regulation plans, showing their thorough efforts.

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