The Financial Conduct Authority (FCA) has fined CB Payments Limited (CBPL), part of Coinbase Group, £3.5m for repeated breaches in offering services to high-risk clients.
While CBPL does not undertake crypto transactions for its customers, it acts as a gateway for customers to trade crypto through other entities within the Coinbase Group.
According to the regulator, the firm signed a voluntary requirement in October 2020, which prevented it from taking on new high-risk customers while it addressed issues with its framework.
Despite that restriction, CBPL onboarded 13,416 high-risk customers, who then executed $226m (£157.4m) worth of crypto transactions through other entities within the Coinbase Group.
See also: Regulation now makes crypto a viable asset class
The FCA said the breaches were the result of CBPL’s lack of “due skill, care and diligence” in designing, implementing and monitoring the controls put in place to ensure that the voluntary requirement was met.
Because of inadequacies in the initial monitoring of the firm’s compliance with the voluntary requirement, repeated breaches went undiscovered for almost two years.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “The money laundering risks associated with crypto are obvious and firms must take them seriously. Firms like CBPL that enable crypto trading, need to have strong financial crime controls.
“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 jeopardises the integrity of our markets.”
The action was taken under the Electronic Money Regulations 2011, and marks the first time the FCA has taken such enforcement action using these powers.
This story was written by our sister title, Portfolio Adviser
