Coinbase UK fined $4.5 million for ‘high-risk’ customer onboarding
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Coinbase’s UK branch has been fined $4.5 million by UK regulators for breaching a voluntary agreement related to user onboarding.
In 2020, CB Payments Limited (CBPL), part of the Coinbase Group, entered into a voluntary agreement with the UK’s Financial Conduct Authority (FCA) to prevent onboarding customers the regulator deemed ‘high risk’.
However, CBPL is alleged to have onboarded 13,416 customers deemed high-risk by the FCA and provided them with cryptocurrency services, which is also prohibited by the agreement. The UK regulator fined Coinbase Group’s CBPL £3,503,546 ($4.5 million) for “repeatedly breaching” the agreement.
Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, said in a statement on July 25 that the lack of controls increases the potential money laundering risk.
“CBPL had significant weaknesses in its controls and the requirements were necessary because the FCA said so. However, CPBL repeatedly breached these requirements. This increased the risk that criminals would use CBPL to launder criminal proceeds. We will not tolerate this laxity that threatens the integrity of our markets.”
The UK regulator’s decision could mean increased scrutiny of other cryptocurrency exchanges in the region, and could lead platforms to seek out more crypto-friendly regulatory jurisdictions.
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Is the UK about to launch a crackdown on cryptocurrencies?
The UK regulator’s decision could signal the start of a wider crackdown on cryptocurrency service providers in the country.
The FCA fined Coinbase’s UK branch under digital currency regulations in 2011.
What is particularly concerning for the cryptocurrency industry is that this fine marks the first time the FCA has taken enforcement action under this law.
The regulator added that the company’s lack of early monitoring practices for voluntary agreements (VREQs) had led to no violations being detected in the past two years.
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This is a working story, so we’ll add more information as it becomes available.