Coinbase’s UK arm, CB Payments Limited (CBPL), has been fined $4.5 million by the Financial Conduct Authority (FCA) for onboarding customers deemed “high-risk” in violation of a voluntary agreement. In 2020, CBPL agreed to the FCA’s terms to prevent onboarding such customers, yet the firm allegedly onboarded 13,416 high-risk individuals, providing them with cryptocurrency services, which was prohibited by the agreement.
The FCA highlighted that CBPL’s inadequate controls posed potential money laundering risks, according to Therese Chambers, the FCA’s joint executive director of enforcement and market oversight. The FCA stated, “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 regulatory action may signal a broader crackdown on cryptocurrency exchanges in the UK, pushing platforms to seek more crypto-friendly regulatory environments. The FCA imposed the fine under the Electronic Money Regulations 2011, marking the first time enforcement actions have been taken under this act.
Only a small fraction of customers onboarded by CBPL—0.34%—were classified as high-risk. Coinbase clarified that these customers were unintentionally onboarded between October 2020 and October 2023. The FCA’s investigation focused on CBPL’s e-money transmitter services, not on crypto asset transactions, as CBPL is not authorized by the FCA to conduct such transactions.
The regulator noted that CBPL received a 30% discount on the fine for agreeing to resolve the matter. This development could prompt heightened scrutiny of the UK’s crypto sector, impacting other exchanges and potentially influencing future regulatory approaches.
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