Breaking: Coinbase UK Faces $4.5M Fine For Onboarding High-Risk Customers

The United Kingdom regulators have imposed a $4.5 million (£3.5 million) fine on Coinbase’s UK arm, CB Payments Limited (CBPL). The penalty concerns the breach of a voluntary agreement designed to prevent the onboarding of high-risk customers. The U.K.’s Financial Conduct Authority (FCA) announced the fine on Thursday, citing significant weaknesses in CBPL’s control mechanisms.

Coinbase UK Arm Faces Major Penalty

Earlier, in October 2020, Coinbase’s UK branch, CBPL, agreed to a voluntary arrangement with the Financial Conduct Authority (FCA). This arrangement restricted CBPL from accepting new customers identified as “high-risk” by the regulator. Moreover, it also barred the company from providing services to these high-risk individuals.

The purpose of this agreement was to reduce the risk of money laundering and to maintain the integrity of the market. It aimed at preventing potentially illegal activities on the CBPL platform. However, despite these measures, the FCA found that CBPL had onboarded and served 13,416 “high-risk customers.”

Furthermore Therese Chambers, FCA’s joint executive director of enforcement and market oversight, vehemently criticized CBPL for its shortcomings. “CBPL’s controls had major weaknesses, and the FCA had already pointed this out, which led to the implementation of these requirements. Nevertheless, CBPL continually violated these requirements,” Chambers remarked.

In addition, she highlighted that the poor compliance raised the risk of criminal activities, including money laundering, within CBPL. As a consequence of these violations, the FCA imposed a £3.5 million ($4.5 million) fine on CBPL.

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