Jul 26, 2024 12:25
CB Payments Limited (CBPL) has been fined £3,503,546 by theFinancial Conduct Authority (FCA) for breaching a regulatory requirement. Thefine is a result of CBPL's failure to comply with a rule that prevented it fromoffering services to high-risk customers.
CBPL, part of the Coinbase Group, operates a globalcryptoasset trading platform. While CBPL itself does not handle cryptoassettransactions, it facilitates customer access to these transactions throughother Coinbase Group entities. The firm is not registered for crypto asset activities in the UK.
CBPL Breaches High-Risk Limits
In October 2020, CBPL agreed to a voluntary requirement(VREQ) after discussions with the FCA. This requirement was imposed due toconcerns about the effectiveness of CBPLs financial crime control framework.The VREQ prohibited CBPL from onboarding new high-risk customers until itimproved its control measures.
Despite this restriction, CBPL onboarded and providede-money services to 13,416 high-risk customers. Approximately 31 percent ofthese customers deposited about USD $24.9 million. These funds were used forwithdrawals and cryptoasset transactions through other entities in the CoinbaseGroup, totaling around USD $226 million.
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, 2024First FCA Fine under Regulations
The breaches occurred because CBPL did not properly design,test, implement, or monitor the controls necessary to ensure compliance withthe VREQ.
The firm failed to account for all potential onboarding methods anddid not adequately monitor compliance. As a result, repeated and significantbreaches went undetected for nearly two years.
Therese Chambers, Joint Executive Director of Enforcementand Market Oversight at the FCA, stated: The money laundering risks associatedwith crypto are obvious and firms must take them seriously. Firms like CBPLthat enable crypto trading need to have strong financial crime controls.
CBPL'scontrols had significant weaknesses, which is why the requirements wereimposed. However, CBPL repeatedly breached those requirements. This increasedthe risk that criminals could use CBPL to launder the proceeds of crime. Wewill not tolerate such laxity, which jeopardizes the integrity of our markets.
This enforcement action marks the first use of the FCA's powers under the Electronic Money Regulations 2011. CBPL agreed to resolve thematter and received a 30% discount on the fine for doing so.
This article was written by Tareq Sikder at www.financemagnates.com.
World Crypto Global
