Cryptocurrency firm CB Payments Limited (CBPL) has been hit with a £3.5 million fine following the Financial Conduct Authority’s (FCA) inaugural crypto enforcement action.
This penalty against CBPL, a subsidiary of Coinbase Group, marks the FCA’s first use of enforcement powers under the Electronic Money Regulations 2011. The action came after the FCA discovered “significant weaknesses and gaps” in CBPL’s financial crime controls in 2020. Despite agreeing to a voluntary requirement to address these issues and refrain from onboarding new high-risk customers, CBPL continued to serve over 13,000 such clients over three years.
A third of these customers made nearly 13,000 deposits totaling approximately $25 million (£19.4 million), leading to transactions within the Coinbase network amounting to around $226 million (£175 million). Notably, several transactions exceeded $50,000 (£38,800), prompting CBPL to file Suspicious Activity Reports for 62 customers due to concerns about money laundering.
The FCA’s investigation revealed that CBPL’s controls were inadequate in design, testing, implementation, and monitoring, failing to account for all potential onboarding scenarios. As a result, the breaches went undetected for nearly two years.
Following the FCA’s action, CBPL agreed to a settlement, receiving a 30 percent discount on its fine, reducing it from over £5 million.
Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, emphasized the importance of robust financial crime controls in the crypto sector. She stated, “Firms like CBPL that facilitate crypto trading must have stringent controls in place. CBPL’s repeated breaches increased the risk of facilitating criminal activities, which undermines market integrity. We will not tolerate such laxity.”
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Cryptocurrency firm CB Payments Limited (CBPL) has been hit with a £3.5 million fine following the Financial Conduct Authority’s (FCA) inaugural crypto enforcement action.
This penalty against CBPL, a subsidiary of Coinbase Group, marks the FCA’s first use of enforcement powers under the Electronic Money Regulations 2011. The action came after the FCA discovered “significant weaknesses and gaps” in CBPL’s financial crime controls in 2020. Despite agreeing to a voluntary requirement to address these issues and refrain from onboarding new high-risk customers, CBPL continued to serve over 13,000 such clients over three years.
A third of these customers made nearly 13,000 deposits totaling approximately $25 million (£19.4 million), leading to transactions within the Coinbase network amounting to around $226 million (£175 million). Notably, several transactions exceeded $50,000 (£38,800), prompting CBPL to file Suspicious Activity Reports for 62 customers due to concerns about money laundering.
The FCA’s investigation revealed that CBPL’s controls were inadequate in design, testing, implementation, and monitoring, failing to account for all potential onboarding scenarios. As a result, the breaches went undetected for nearly two years.
Following the FCA’s action, CBPL agreed to a settlement, receiving a 30 percent discount on its fine, reducing it from over £5 million.
Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, emphasized the importance of robust financial crime controls in the crypto sector. She stated, “Firms like CBPL that facilitate crypto trading must have stringent controls in place. CBPL’s repeated breaches increased the risk of facilitating criminal activities, which undermines market integrity. We will not tolerate such laxity.”
For more details:
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