FCA Fines Coinbase Affiliate CB Payments Over £3.5 Million for Financial Crime Control Failures

The UK Financial Conduct Authority (FCA) has imposed a £3,503,546 fine on CB Payments Limited (CBPL), an entity operating within the Coinbase Group, for severe breaches concerning financial crime controls and onboarding restrictions. CBPL acts as an electronic money gateway facilitating customer access to cryptoasset trading across other Coinbase Group platforms. While CBPL is not registered to directly execute cryptoasset transactions in the UK, it serves as a critical payment bridge for individuals looking to trade digital assets. In October 2020, following regulatory concerns regarding weaknesses in CBPL's financial crime control framework, the firm entered into a voluntary requirement (VREQ). This legal agreement prohibited CBPL from onboarding new high-risk customers until its internal control frameworks were sufficiently strengthened. Despite this binding requirement, CBPL failed to implement adequate monitoring and control measures. The firm subsequently onboarded or provided payment services to 13,416 high-risk customers. Approximately 31 percent of these accounts deposited an estimated $24.9 million USD, which was later utilized to execute transactions and withdrawals totaling roughly $226 million USD across other Coinbase Group entities. The FCA discovered that these failures persisted undetected for almost two years due to inadequate design, implementation, and oversight of the required compliance mechanisms. The regulator emphasized that crypto platforms and payment gateways must strictly adhere to anti-money laundering standards to prevent illicit funds from flowing through the financial system. This enforcement marks the FCA's first formal penalty issued under the Electronic Money Regulations 2011 against a firm facilitating cryptoasset trading. CBPL agreed to settle the findings, which qualified the company for a 30 percent discount on the total financial penalty.