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Coinbase’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 them cryptocurrency services, which was also prohibited by the agreement. The British regulator fined Coinbase Group’s CBPL 3,503,546 British 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 <a href="https://www.fca.org.uk/news/press-releases/fca-first-enforcement-action-against-firm-enabling-cryptoasset-trading" target="_blank" rel="noopener nofollow"></a><a href="https://www.fca.org.uk/news/press-releases/fca-first-enforcement-action-against-firm-enabling-cryptoasset-trading" target="_blank" rel="noopener nofollow">said</a> in a July 25 statement:
<blockquote data-ct-non-breakable="true">
 “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.”
</blockquote>
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.
Related: <a href="https://cointelegraph.com/news/galaxy-asset-management-raises-113m-for-new-crypto-venture">Galaxy Asset Management raises $113M for new crypto venture</a>
<h2 id="is-this-the-start-of-a-crypto-crackdown-in-the-united-kingdom">Is this the start of a crypto crackdown in the United Kingdom?</h2>
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 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)
Related: <a href="https://cointelegraph.com/news/mystiko-network-airdrop-insider-trading-allegations">Insider trading allegations hit Mystiko Network airdrop</a>
<h2 id="only-0-34-of-onboarded-customers-were-considered-high-risk">Only 0.34% of onboarded customers were considered “high-risk”</h2>
Only 0.34% of customers onboarded by CBPL qualified as “high-risk” in the British regulator’s purview, which were “unintentionally onboarded,” according to a <a href="https://www.coinbase.com/en-gb/blog/coinbase-and-fca-reach-agreement-to-resolve-investigation-into-voluntary-requirement-breaches" target="_blank" rel="noopener nofollow">statement</a> shared by Coinbase.
<blockquote data-ct-non-breakable="true">
 “CBPL unintentionally onboarded some customers between October 30, 2020, and October 1, 2023, (representing 0.34% of customers on-boarded) who were classified as high-risk under the terms of the VREQ. This led to the FCA’s investigation and subsequent action.”
</blockquote>
Moreover, the investigation didn’t focus on crypto asset transactions, but on the firm’s e-money transmitter services, the statement wrote:
<blockquote data-ct-non-breakable="true">
 “CBPL has been authorized by the FCA since 2017 as an e-money institution and provides e-money and payment services to customers located in certain jurisdictions. As a result, CBPL is not authorised by the FCA to conduct cryptoasset transactions for customers and the FCA’s investigation did not look at any cryptoasset transactions.”
</blockquote><iframe width="100%" height="315" src="https://www.youtube.com/embed/E8vvmZxyb3I" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen data-ct-non-breakable="true"></iframe>
<figcaption style="text-align: center;">
 Why Bitcoin could emerge stronger from the U.S. crypto crackdown. Source: Cointelegraph
</figcaption>
The British regulator said that Coinbase’s CBPL “qualified” for a 30% discount on the fine since it “agreed to resolve the matter.”
Magazine: <a href="https://cointelegraph.com/magazine/cryptocurrency-electric-capital-avichal-garg/">Coinbase will not mention ‘crypto’ in five years: Avichal Garg, X Hall of Flame</a>

Coinbase UK fined $4.5 million for ‘high-risk’ customer onboarding

Съдържание

Cointelegraph

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