CB Payments Ltd. Fined £3.5 million by FCA
CB Payments Ltd. (CBPL), a subsidiary of Coinbase, has been fined £3.5 million ($4.5 million) by the Financial Conduct Authority (FCA) for providing services to high-risk customers despite existing restrictions.
Background and Compliance Issues
The London-based e-money institution, authorized by the FCA and linked to the cryptocurrency exchange Coinbase, does not offer cryptocurrency services itself but facilitates transactions for customers through various Coinbase entities.
FCA’s concerns about CBPL’s control over financial crime were first raised in February 2020, following a visit to its offices. As a result, CBPL entered into a voluntary agreement with the FCA, which prevented the onboarding of new high-risk customers while addressing the identified issues. However, the recent statement from the FCA indicated that CBPL added and/or provided e-money services to 13,416 high-risk customers.
Compliance Violations at Coinbase
The Financial Conduct Authority (FCA) has identified that approximately 31% of clients at Coinbase deposited around $24.9 million. These funds were used for withdrawals and then for executing multiple cryptocurrency transactions through other entities within the Coinbase Group, totaling approximately $226 million.
Undetected Violations
The violations went undetected for nearly two years, a fact that the FCA attributed to the lack of sufficient skills at CBPL in monitoring the controls implemented to ensure the effectiveness of the voluntary agreement. This lack of oversight led to significant financial activities by high-risk clients who violated the restrictions.
Response from Coinbase
In response to the FCA findings and the subsequent fine, Coinbase emphasized its commitment to regulatory compliance. The company stated:
“Coinbase remains committed to high standards of regulatory compliance, and this means that we are taking the necessary steps to strengthen our monitoring and controls to prevent similar violations in the future.”
Enhancing Compliance through Regulatory Partnerships
At our company, we value our partnership with regulatory authorities when it comes to compliance and other areas. We are always willing to acknowledge when we fall short of expectations and make improvements – which is what we have done here.
