The crypto exchange will pay a $50m fine and invest $50m in its AML programme, which had “wide-ranging and longstanding failures”.
Crypto exchange Coinbase has reached a $100m settlement after New York’s state financial regulators found that there had been longstanding issues with its anti-money laundering checks.
Coinbase will pay a $50m fine and invest an additional $50m into strengthening its compliance efforts over the next two years.
According to the regulators, the crypto firm had let customers open accounts without sufficient background checks, and its failures made the platform vulnerable to “serious criminal conduct”, including “examples of fraud, possible money laundering, suspected child sexual abuse material-related activity, and potential narcotics trafficking”.
“It is critical that all financial institutions safeguard their systems from bad actors, and the Department’s expectations with respect to consumer protection, cybersecurity, and anti-money laundering programs are just as stringent for cryptocurrency companies as they are for traditional financial services institutions,” NYS Department of Financial Services Superintendent Adrienne Harris said.
“Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth.”
According to the regulator, Coinbase’s failure to keep up with its rate of growth meant that by late 2021 there was a growing backlog of more than 100,000 unreviewed transaction alerts.
This caused the company to routinely fail timely investigate and report suspicious activity.
“We are always willing to acknowledge where we have fallen short and we welcome opportunities to improve our programs,” Coinbase said in a statement on its website.
The company will invest $50m into a compliance programme over the next two years to resolve its issues, “pursuant to a plan approved by [the regulator]”.
“We believe that New York – and the broader industry – needs more crypto players committed to compliance and working with regulators,” Coinbase added.
Coinbase is far from the only crypto company to be plagued with anti-money laundering compliance issues, with the news of the settlement landing as scrutiny around the space continues to ramp up.
Following the collapse of FTX in November and the arrest of its founder, Sam Bankman-Fried, who just plead not guilty to fraud, the crypto space has never had more eyes on it.
21 March 2023
17 March 2023
16 March 2023
20 March 2023
21 March 2023