Coinbase UK Fined $4.5 Million by FCA for Failing to Prevent High-Risk Customer Onboarding

Coinbase’s UK division has been hit with a hefty fine of $4.5 million by the Financial Conduct Authority (FCA), marking a significant move in regulating cryptocurrency exchanges in the region. This penalty stems from the company’s failure to follow a voluntary agreement made with the FCA in 2020. The agreement was designed to prevent the onboarding of customers deemed “high risk.” According to the FCA, Coinbase’s CB Payments Limited (CBPL) onboarded more than 13,000 high-risk customers, violating the terms of this agreement.

The fine issued by the FCA to CBPL amounts to £3,503,546, a stark reminder of the compliance duties that crypto exchanges must adhere to. Therese Chambers, an official at the FCA, noted that the lack of proper controls could lead to potential risks associated with money laundering. The concerns raised by the regulator could signal a shift in focus towards more rigorous monitoring of cryptocurrency businesses in the UK, prompting exchanges to either step up their compliance measures or consider relocating to jurisdictions with more favorable regulations.

This decision marks a noteworthy moment for the FCA, as it represents the first enforcement action taken under the Electronic Money Regulations of 2011 against a cryptocurrency service provider. The FCA highlighted that the breaches had gone unnoticed for two years due to insufficient monitoring practices related to the voluntary agreement. As the landscape of cryptocurrency regulation evolves, this situation may herald increased scrutiny not just for Coinbase but for the entire industry moving forward.