Coinbase’s CBPL Fined $4.5 Million by UK Regulator

CB Payments Ltd. (CBPL), an e-money institution and payment processor affiliated with crypto exchange Coinbase (COIN), has been fined more than £3.5 million ($4.5 million) by the Financial Conduct Authority (FCA) for lapses in money laundering controls.

The London-based company, which is authorised by the FCA and does not itself offer cryptocurrency services directly, acts as a gateway for clients to trade crypto with entities within the Coinbase group.

Concerns about the company’s financial crime controls were raised after the FCA visited its offices in February 2020, and CBPL subsequently signed a voluntary agreement preventing the company from taking on new high-risk customers while it addressed these issues.

“Despite existing restrictions, CBPL provided and/or provides e-money services to 13,416 high-risk customers,” the FCA said in a statement today. “Approximately 31 percent of these customers deposited approximately $24.9 million. These funds were then used to withdraw funds and then conduct multiple crypto asset transactions totaling approximately $226 million through other Coinbase Group entities.”

The FCA said the failure to uncover the breaches for almost two years was due to CBPL’s failure to monitor the controls in place.

“Coinbase continues to hold itself to high regulatory compliance standards, and that means partnering with regulators when it comes to compliance and other areas,” the company wrote in a blog post. “When we fall short, we are willing to admit it and make improvements — that’s what we’re doing here.”