UK Branch of Coinbase Fined for Onboarding Failures

The UK arm of the cryptocurrency exchange Coinbase has fallen afoul of the UK’s Financial Conduct Authority (FCA) which has fined the exchange £3.5 million (US$4.5 million) for onboarding customers that it deems ‘high-risk’.

In October 2020, CB Payments Limited (CBPL), the gateway by which customers can trade crypto with Coinbase, agreed to restrictions that prevented it from taking new ‘high risk’ customers following an inspection by the FCA which determined it was lacking financial crime controls. However, following this, the FCA has reported that CBPL took on or accepted over 13000 high-risk customers, over 30% of which have deposited around US$25 million, which has then been used in multiple crypto transactions across Coinbase Group.

Though these customers represent only a fraction of a percent of CBPL’s customers, and though CBPL has said that these were unintentionally onboarded, the result of the failure is that the platform was exposed to AML and terrorist financing risks that suitable compliance measures are designed to remove.

A representative of the FCA, Therese Chambers, joint executive director of enforcement, commented: “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”.

The resulting fine that Coinbase has had to pay, which was reduced by 30% after the company agreed to resolve the issues, could have been entirely avoided if a solution such as Blockpass’ KYC Connect® had been implemented.

Blockpass’ solutions are designed to meet the highest safety and security standards regardless of the jurisdiction in question. Watertight KYC and AML compliance are at the core of the services Blockpass provides, with clarity, functionality, efficiency and ease-of-use making adhering to regulatory standards simple.

As crypto and financial services become a part of an increasing number of other industries, including messaging and social media, Blockpass is ready to ensure that individuals and businesses are protected from fraud and avoid unnecessary fines and related financial hits.

About Blockpass

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