Coinbase Subsidiary Fined $4.5 Million by FCA for Breaching Customer Regulations

cryptonews.com:

CB Payments Limited (CBPL), a subsidiary of the Coinbase Group, has been fined £3,503,546 by the Financial Conduct Authority (FCA) for repeatedly violating a restriction that barred the firm from offering services to high-risk customers.

This is the first time the FCA has taken enforcement action under the Electronic Money Regulations of 2011.

CBPL, which acts as a gateway for customers to trade crypto assets via other Coinbase Group entities, does not undertake crypto asset transactions for customers and is not registered to conduct crypto asset activities in the UK.

We've fined CB Payments Ltd £3,503,546 for repeatedly breaching a requirement that prevented the firm from offering services to high-risk customers. #cryptoassets #CryptoTrading #FinancialRegulation https://t.co/etahpXO3q3

— Financial Conduct Authority (@TheFCA) July 25, 2024

In October 2020, following significant engagement with the FCA over concerns about its financial crime control framework, CB Payments Limited (CBPL) entered into a voluntary requirement (VREQ) that prevented it from taking on new high-risk customers until the issues were addressed.

However, despite these restrictions, CBPL onboarded and/or provided e-money services to 13,416 high-risk customers, with approximately 31% of these customers depositing around USD 24.9 million. These funds were subsequently used to execute multiple crypto asset transactions via other Coinbase Group entities, totaling approximately USD 226 million.

The FCA’s investigation found significant weaknesses in CBPL’s controls, stating,

“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.”

The FCA’s