- Coinbase will be fined $100 million for failing to comply with KYC rules by allowing customers to open accounts without performing verifications to comply with anti-money laundering laws.
- Coinbase had already amassed more than 100,000 alerts about customer transactions that were potentially suspicious and had not been properly vetted.
The present day New York state regulators in the United States announced that the crypto exchange coinbase it will have to pay a fine of $50 million US dollars and, additionally, it will have to invest another $50 million dollars in the compliance program.
This was part of a deal Coinbase struck with the New York State Department of Financial Services (NYDFS). But why was it necessary to reach this agreement?
Coinbase Files Compliance Failures
Well it turns out that heNew York Regulators they noticed in 2020 that Coinbase was filing compliance failures following a routine examination that took place after the company was licensed to operate in the state in 2017.
Specifically the regulators found that the company had allowed clients to open accounts without conducting background checks necessary to comply with anti-money laundering laws, And while compliance issues were noted in 2020, regulators said the failures continued to lead to a formal investigation in 2021.
According to regulators, Coinbase had already amassed more than 100,000 alerts about customer transactions that were potentially suspicious and had not been properly vetted.
Coinbase will need to improve its compliance program
According to the New York Times, Coinbase initially reached an agreement with regulators to hire an independent consultant who would be in charge of reviewing the company’s operations to comply with United States laws.
However, as previously mentioned, the problems persisted and regulators opened a formal investigation in 2021. In fact, according to the NYT, it was found that Coinbase reportedly unintentionally helped a criminal steal $150 million USD from a company.
Consequently, Coinbase has had to reach an agreement with the NYDFS that consists of paying US$50 million in fines and another US$50 million that will be invested in improving the company’s compliance program.
Paul Grewal, Coinbase’s legal director, assured that the company continues to “Committed to being a leader and role model in the crypto space, and this means partnering with regulators on compliance and other areas“, on the blog post.
In it Press release of the NYDFS, Superintendent Adrienne Harris assured that:
“Coinbase was unable to build and maintain a functional compliance program that could keep up with its growth. That failure exposed the platform to potential criminal activity that required the Department to take immediate action, including installing an Independent Monitor.”.
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