On July 25, the UK’s Financial Conduct Authority (FCA) published a press release noting that it had taken the first enforcement action against CB Payments Limited (CBPL), which facilitates crypto trading.
According to the FCA, CBPL is part of the Coinbase Group and does not carry out crypto transactions for customers. However, the firm is an entity that allows users to trade crypto through other entities within the Coinbase Group and has not registered with the regulator to carry out crypto activities in the country.
Four years ago, the firm engaged the regulator regarding concerns associated with the efficacy of its financial crime control framework. CBPL was not allowed to take on new high-risk customers until the issues with its framework were addressed. However, the firm did not comply with the restrictions, but continued to onboard and provide services to customers, specifically 13,146 customers.
“Approximately 31 per cent of these customers deposited around USD $24.9 million. These funds were used to make withdrawals and then execute multiple cryptoasset transactions via other Coinbase Group entities, totalling approximately USD $226 million,” reads the press release.
The FCA claims that CBPL failed to carefully design, test, implement and monitor the controls established to facilitate effective compliance, leading to the breaches.
“Because of inadequacies in the initial monitoring of compliance with the VREQ, repeated and material breaches went undiscovered for almost two years. 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,” said the FCA.
Hence, the regulator has imposed a fine of £3,503,546 on the firm. However, the FCA said CBPL qualified for a 30 percent discount on its fine due to its agreement to resolve the issue. The decision may lead to a wider crackdown and further scrutiny of other crypto exchanges across the country and ultimately push them out to seek other jurisdictions friendly with crypto.
