Coinbase UK subsidiary fined $4.5 million for inadequate AML controls

Coinbase's UK subsidiary CB Payments Limited (CBPL) has been fined $4.5 million by the UK Financial Conduct Authority for poor anti-money laundering controls. CBPL is a regulated electronic money institution (EMI) that serves as a gateway for UK customers to trade crypto assets between Coinbase Group entities. In late 2020, the company agreed to strengthen anti-money laundering controls and no longer accept high-risk customers in the UK after a warning from the UK Financial Conduct Authority. However, the financial regulator claims that CBPL subsequently provided electronic money services to approximately 13,000 "high-risk" customers over a two-year period, receiving approximately $24.9 million from 31% of them. It is reported that this is the first time that the UK Financial Conduct Authority has taken enforcement action against a cryptocurrency-related business under the Electronic Money Regulations 2011. The regulations are generally intended to regulate small businesses engaged in digital payment services.