A unit of Coinbase Global Inc was fined £3.5 million (US$4.5 million or RM20.9 million) by the UK for offering cryptoasset trading services to high-risk customers - in the first move of its kind from the regulator that’s grappling with money laundering controls in digital currencies.

The Financial Conduct Authority said Thursday that CB Payments Limited had repeatedly broken a voluntary agreement by providing services to 13,416 high-risk customers, with around 31% of them depositing US$25 million. The funds were then used to make transactions via Coinbase Group entities worth around US$226 million, they said.

“We believe our investment in compliance stands out in the market as one of the highest, and that our customers should feel safe and protected when using our platforms,” Coinbase said in a blog post.

CBPL does not offer cryptoasset transactions but acts as a gateway for customers to trade through other entities within the Coinbase Group. The FCA agreement was put in place in October 2020 after concerns about the firm’s financial crime controls. 

The breaches included the firm’s lack of diligence in implementing the rules. The rule breaking went undiscovered for two years due to inadequacies in the monitoring of compliance, the FCA said.

Coinbase doesn’t publicly say how many customers it has in the UK, but the nation is its second largest market after the US. It has an e-money licence and is on the FCA’s anti-money laundering register for cryptoasset businesses.

“The money laundering risks associated with crypto are obvious and firms must take them seriously,” Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said.

  - Bloomberg