- The UK’s Financial Conduct Authority (FCA) has levied a fine on CB Payments Limited (CBPL).
- CBPL, a subsidiary of Coinbase, breached a voluntary agreement aimed at high-risk customer management.
- The FCA raised concerns over CBPL’s financial crime control framework, resulting in a £3.5 million fine.
A fine of £3.5 million has been imposed on Coinbase’s subsidiary for regulatory breaches involving high-risk clients in the UK.
FCA Imposes £3.5 Million Fine on Coinbase Subsidiary for Regulatory Violations
The FCA has fined CB Payments Limited (CBPL), a subsidiary of Coinbase, £3,503,546 for failing to adhere to a voluntary agreement. This agreement was designed to prevent the onboarding of high-risk customers while the firm addressed compliance concerns over its financial crime control measures.
Background of the Voluntary Agreement
In late 2020, CBPL and the FCA agreed on a voluntary requirement (VREQ) that restricted the firm from taking on new high-risk clients. Despite this, CBPL provided e-money services to 13,416 high-risk customers, which led to the heavy fine. The FCA’s statement highlighted a lack of due diligence and effective control mechanisms as the root causes of these breaches.
Reactions and Remedial Actions
CBPL has accepted the fine, and Coinbase has reiterated its commitment to regulatory compliance. In a public statement, Coinbase emphasized that CBPL is continually refining its control systems to meet regulatory requirements. “We take the FCA’s findings and our broader regulatory compliance very seriously,” the statement said.
Future Implications for the Crypto Sector
This incident serves as a cautionary tale for other cryptocurrency firms operating in the UK, reinforcing the importance of stringent compliance measures. The FCA’s firm stance against lapses in financial crime controls highlights the regulatory scrutiny the sector faces.
Conclusion
The fine imposed on CBPL underscores the critical need for robust compliance protocols in the cryptocurrency industry. Firms must prioritize regulatory adherence to avoid punitive measures and foster a secure, trustworthy financial environment for all stakeholders.
