Coinbase Fined $4.5 Million by UK Authorities for Onboarding High-Risk Customers

By: Isha Das

The UK's Financial Conduct Authority (FCA) has imposed a substantial fine of $4.5 million on a subsidiary of Coinbase for what it termed as serious lapses in the company's anti-money laundering protocols. Identified failures were noted in the documentation and verification processes that were required by the regulatory standards.

This recent penalty centers on Coinbase’s subsidiary, Coinbase Payments Limited (CBPL), which has been under scrutiny for its failure to mitigate risks adequately. Despite existing restrictions, CBPL reportedly onboarded 13,416 high-risk customers and provided them with e-money services. The FCA has categorized these actions as a breach of regulatory agreements aimed at combating financial crime.

According to the FCA, the imposed fine reflects the seriousness of the breaches regarding onboarding high-risk customers without robust anti-money laundering protocols. Coinbase has since asserted its commitment to complying with all regulatory obligations and announced steps to enhance its internal controls and compliance frameworks. In a statement, the company emphasized that measures are being taken to prevent a recurrence of such regulatory lapses.

This development serves as a stark reminder of the rigorous compliance requirements for financial institutions operating in the UK, and underlines the stringent oversight exercised by regulators to maintain the integrity of the financial system. As the cryptocurrency industry continues to grow, enhanced regulatory frameworks will likely play a pivotal role in shaping its future trajectory.