United Kingdom: Issued ruling in FCA Investigation into CB Payments Limited for breaching the voluntary requirement on financial crime control framework

On 23 July 2024, the Financial Conduct Authority (FCA) issued a ruling with a fine of around GBP 3.5 million against CB Payments Limited (CBPL) for ineffective financial crime control framework. CBPL is an authorised electronic money Institution within the Coinbase Group, responsible for handling fiat currency deposits in e-money wallets used for purchasing and exchanging crypto assets. The ruling highlighted that CBPL entered into a Voluntary Requirement (VREQ) with the FCA in 2020 which barred CBPL from onboarding new high-risk customers before addressing the concerns on the company's financial crime control framework. Despite the VREQ, CBPL onboarded 13'416 high-risk customers, with 31% depositing about USD 24.9 million, which was subsequently used for crypto asset transactions totalling around USD 226 million. The ruling concluded that breaches occurred due to CBPL’s insufficient design, testing, implementation, and monitoring of controls for the VREQ, including inadequate consideration of various onboarding methods, leading to nearly two years of undiscovered non-compliance. The ruling mandates that CBPL must pay the full financial penalty to the Authority by 6 August 2024 in the absence of which the Authority may recover the outstanding amount as a debt owed by CBPL.