Coinbase UK Unit Faces £3.5M Fine for Serious Breach of Financial Crime Controls

A Coinbase business in Britain has been fined for breaching a regulatory agreement to enhance its defences against financial crime, marking the first sanction of its kind in the UK cryptoassets sector.

The Financial Conduct Authority (FCA) announced that CB Payments Limited (CBPL), a gateway for customers to trade cryptoassets within the global Coinbase Group, had voluntarily agreed in October 2020 to improve its financial crime controls following a visit by the regulator.

The agreement stipulated that CBPL could not accept new high-risk customers until the issues were addressed. However, the company took on or provided e-money services to 13,416 such customers, with nearly a third depositing a total of $24.9 million, the FCA said.

This money was used to execute multiple cryptoasset transactions through other Coinbase entities, totalling approximately $226 million, the regulator added, noting that repeated breaches of the voluntary agreement went undiscovered for nearly two years.

"CBPL's controls had significant weaknesses, and the FCA highlighted this, which is why the requirements were necessary. CBPL, however, repeatedly breached those requirements," Therese Chambers, Joint Executive Director of Enforcement at the FCA, said on Thursday.

CBPL will pay a £3.5 million fine after qualifying for a 30% discount by agreeing to resolve the case.

"We welcome regulation and are committed to working proactively and closely with the most sophisticated financial regulators in the world, including the FCA, to ensure we provide the most compliant, trusted, and secure platform for our customers," Coinbase said on Thursday.

Kate Gee, a crypto litigation lawyer at Signature Litigation, stated that this first-of-its-kind fine serves as a warning for firms to take financial crime controls very seriously.

"Firms that do not take sufficient measures to protect against financial crime and who fail to comply with operational restrictions will face scrutiny and enforcement action," Gee said.

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