Release Date: 23rd July 2024

To access the original FCA document, click here.

Summary

The Financial Conduct Authority (FCA) issued a Final Notice on 23 July 2024, imposing a financial penalty of £3,503,546 on CB Payments Ltd (CBPL), a subsidiary of the Coinbase Group. The fine was imposed due to CBPL’s failure to comply with mandatory regulatory requirements aimed at preventing high-risk customers from accessing its e-money and payment services. These breaches, which occurred between October 2020 and October 2023, involved onboarding over 13,000 high-risk customers and allowing them to conduct prohibited transactions, some of which were linked to potential money laundering activities.

Key Takeaways for Other Firms:

• Robust Compliance Systems: Ensure that compliance controls, especially automated ones, are thoroughly tested and effectively implemented across all systems and products to avoid regulatory breaches.
• Maintain Accurate Records: Keep detailed records of compliance efforts, especially when implementing regulatory requirements, to demonstrate adherence to rules.
• Continuous Monitoring: Regularly review and update compliance frameworks to address any gaps or failures promptly, ensuring they evolve with the business.
• Effective Communication: Ensure that all teams involved in compliance, including engineering and product teams, are fully informed and equipped to implement regulatory requirements correctly.
• Proactive Remediation: If breaches occur, act quickly to investigate, remediate, and enhance controls to prevent future issues, and cooperate fully with regulators during investigations.

In conclusion, the FCA’s action against CBPL underscores the critical importance of maintaining rigorous and effective financial crime controls. Firms must prioritise compliance with regulatory requirements to safeguard the integrity of the financial system and avoid significant penalties.