Source: Sharecast
In 2020, CBPL entered into a voluntary requirement (the VREQ) which prevented it from taking on new high-risk customers while it addressed issues with its framework.
Despite the restrictions in place, CBPL - a UK subsidiary of Coinbase - onboarded and/or provided e-money services to 13,416 high-risk customers. Around 31% of these customers deposited approximately $24.9m. These funds were used to make withdrawals and then execute multiple cryptoasset transactions via other Coinbase Group entities, totalling about $226m.
CBPL does not undertake cryptoasset transactions for customers but it acts as a gateway for customers to trade cryptoassets via other entities within the Coinbase Group. It is not currently registered to undertake cryptoasset activities in the UK.
The FCA said the breaches were the result of CBPL’s "lack of due skill, care and diligence in the design, testing, implementation and monitoring of the controls put in place to ensure that the VREQ was effective".
This included failing to consider all of the various ways in which customers might be onboarded when designing the controls.
"Because of inadequacies in the initial monitoring of compliance with the VREQ, repeated and material breaches went undiscovered for almost two years," it added.
Therese Chambers, joint executive Director of Enforcement and Market Oversight at the FCA said: "The money laundering risks associated with crypto are obvious and firms must take them seriously. Firms like CBPL that enable crypto trading need to have strong financial crime controls. CBPL's controls had significant weaknesses and the FCA told it so, which is why the requirements were needed. CPBL, however, repeatedly breached those requirements.
"This increased the risk that criminals could use CBPL to launder the proceeds of crime. We will not tolerate such laxity, which jeopardises the integrity of our markets."
CBPL qualified for a 30% discount on its fine after the firm agreed to resolve the matter.
