Coinbase Payments Limited, a subsidiary of the Coinbase Group, has been fined just over 3.5 million British pounds ($4.5 million) by the Financial Conduct Authority (FCA). The fine was issued because the firm violated a condition that barred it from repeatedly serving “high-risk” customers.
In a press release, the FCA stated that even with those restrictions, the firm onboarded at least 13,416 high-risk customers for e-money services and provided such services to them. About 31% of these customers lodged about $24. 9 million. Such funds were utilized for withdrawal, followed by various crypto asset transactions with other Coinbase Group entities up to $226,000,000.
Also Read: Coinbase Celebrates SEC’s Spot Ether ETF Approval, Another Milestone for Crypto
FCA’s Critique and Enforcement Action
The FCA criticized CBPL for lacking “due skill, care, and diligence in the design, testing, implementation, and monitoring of the controls put in place” to meet the voluntary requirement effectively. The FCA’s joint executive Director of Enforcement and Market Oversight, Therese Chambers, pointed to the dire risks in the crypto space related to money laundering and stated that crypto “has to be taken seriously by firms.” This enforcement action is the first of its kind under the Electronic Money Regulations 2011; thus, it is a significant case in regulating electronic money services.
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The FCA’s action implies compliance activities must be strict in the crypto sector, particularly for companies engaging risky clients. The example shows that actions aimed at reducing the money laundering risks and providing adequate supervision of the financial services are still being taken.
Therefore, the imposed fine by the FCA emphasizes that companies like CB Payments Limited operate within a relatively strict regulatory setting regarding cryptocurrencies. The enforcement action punishes the violators and reminds everyone in the industry of the importance of compliance and abiding by the rules to safeguard and maintain the financial system’s integrity.
Also Read: Coinbase Sues SEC and FDIC for Alleged Crypto Firm Suppression
Maxwell Mutuma
Maxwell is a crypto-economic analyst and Blockchain enthusiast, passionate about helping people understand the potential of decentralized technology. He writes extensively on topics such as blockchain, cryptocurrency, tokens, and more for top publications such as Coingape, Coin Edition, and The Coin Republic. His goal is to spread knowledge about this revolutionary technology and its implications for economic freedom and social good.