Monat: Juli 2024

• CB Payments Limited (CBPL) a subsidiary the Coinbase Group fined $4.5 million by FCA for onboarding high-risk customers.
• Breaches occurred despite a 2020 agreement to halt onboarding high-risk customers.
• This is FCA’s first action under Electronic Money Regulations 2011 against a crypto firm.

In a landmark decision, the Financial Conduct Authority (FCA) has fined the UK’s Coinbase subsidiary, CB Payments Limited (CBPL), £3.5 million ($4.5 million) for repeated breaches of anti-money laundering regulations.

This enforcement marks the first action taken by the FCA under the Electronic Money Regulations 2011 against a cryptocurrency firm.

CBPL had agreed with the FCA not to onboard high-risk customers

In October 2020, CB Payments Limited (CBPL), part of the Coinbase Group, entered a voluntary agreement with the FCA to halt the onboarding of high-risk customers.

This agreement aimed to bolster the firm’s financial crime controls, which had significant weaknesses as per the FCA’s assessment.

However, despite the restrictions, CBPL proceeded to onboard 13,416 high-risk customers. These customers deposited approximately $24.9 million, which was used for withdrawals and crypto transactions amounting to $226 million through other Coinbase entities.

The FCA’s investigation revealed that CBPL failed to exercise due skill, care, and diligence in designing, testing, implementing, and monitoring controls to comply with the voluntary requirement (VREQ).

The firm did not adequately consider all potential customer onboarding methods, leading to substantial breaches that went undetected for nearly two years.

The Joint Executive Director of Enforcement and Market Oversight at the FCA, Therese Chambers, in a statement issued on July 25, highlighted the severity of the situation stating that CBPL’s controls had significant weaknesses, and the FCA told it so, which is why the requirements were needed.

According to the statement, CBPL, however, repeatedly breached those requirements. This increased the risk that criminals could use CBPL to launder the proceeds of crime. We will not tolerate such laxity, which jeopardizes the integrity of our markets.

The Coinbase subsidiary received a 30% discount on the fine

Coinbase responded to the FCA’s findings, stating that it takes regulatory compliance very seriously and is actively enhancing its controls to ensure adherence to regulatory obligations.

The FCA acknowledged CBPL’s cooperation in the investigation and noted that the firm received a 30% discount on the fine for agreeing to resolve the matter early.

Warning to crypto firms with no financial crime controls

The FCA’s action reflects a broader intent to hold cryptocurrency firms accountable for their anti-money laundering obligations.

Kate Gee, a partner and crypto disputes specialist at Signature Litigation in London, said that the fine against CBPL should be considered a warning to firms to consider their financial crime controls as hugely important, particularly in the crypto sector where there are increased money laundering risks.

Gee went ahead to state that firms that do not do enough to protect against financial crime and who fail to comply with operational restrictions in place will face scrutiny and enforcement action.

This fine not only underscores the importance of robust financial crime controls but also signals potential increased scrutiny for other cryptocurrency exchanges operating in the UK.

The FCA’s decisive action may prompt other platforms to reassess their compliance frameworks to avoid similar penalties.

The post UK’s Coinbase subsidiary fined $4.5 Million for high-risk customer breaches appeared first on CoinJournal.

• Crypto-friendly fintech platform Revolut has secured a banking license in the UK.
• The digital bank has 9 million UK customers and 45 million globally.

After a three-year wait, crypto-friendly fintech firm Revolut has finally secured a banking license from United Kingdom’s banking regulator Prudential Regulation Authority (PRA).

Revolut announced the milestone in a news release on Thursday, July 25, noting that the next step is the “mobilization” stage. Also known as ‘Authorisation with Restrictions’, this is a step in the licensing process that many new banks have to complete as part of building out operations before launching in the market.

“We are incredibly proud to reach this important milestone in the journey of the company and we will ensure we deliver on making Revolut the bank of choice for UK customers” Nik Storonsky, CEO of Revolut, said in a statement.

UK customers not impacted

According to Revolut, the restricted period covering the “mobilization” stage will not impact UK customers. The bank, which has over 9 million customers in the UK and more than 45 million worldwide, has assured its UK customers that use of the Revolut e-money account will continue as normal.

Commenting on the development, Francesca Carlesi, UK CEO of Revolut, said:

“Today’s announcement is a significant step forward for Revolut and for our customers. It is a tremendous responsibility to be a bank in the UK and we will work relentlessly to offer products and services that improve the financial lives of everyone who uses Revolut.

Revolut first applied for the UK license from PRA in 2021.

In May this year, Revolut announced the launch of a new crypto exchange platform dubbed Revolut X.

The stand-alone crypto platform is for professional crypto traders and offers access to on and off ramps and low fees. These features, the fintech said at the time, will see Revolut X compete with leading exchanges in the market.

The post Revolut secures UK banking license appeared first on CoinJournal.

• HSBC Australia will block all customer payments to crypto exchanges as from July 24, 2024.
• The bank told customers in an email that the decision is due to rising cases of crypto related investment scams.
• A recent report suggested Australians lost $171 millin to such crypto scams in 2023.

HSBC Australia has begun blocking payments to crypto exchanges, citing rising cases of scams.

The bank told its customers that the new measure took effect on July 24, with all bank accounts and credit card payments to cryptocurrency exchanges blocked. At least six major banks in Australia currently block payments to crypto exchanges, Cointelegraph noted in a report.

Customer protection

HSBC Australia, like other major banks to take the step in the country, say the objective is to protect its customers.

Clients looking to make payments to crypto platforms will have to find alternative means, the bank wrote in the email.

“From 24 July 2024, HSBC will block payments from bank accounts and credit cards that we reasonably believe are being made to cryptocurrency exchanges, for your protection,” the banking giant wrote.

The bank pointed to a recent report by the Australian competition and consumer regulator, ACCC, for its decision. According to the report, investment scams accounted for up to $171 million in losses for Australians in 2023.

HSBC Australia’s notification to its customers wasn’t the only major setback for crypto in the county on the day. Shortly after the bank’s move, another firm, Bendigo Bank, notified its clients of a similar move. Bendigo Bank also cited investment scams in crypto, asserting that its decision is in the best interest of customers and for their protection.

While HSBC Australia has blocked payments to crypto platforms, the bank will still process customers’ cryptocurrency payments from exchanges.

The post HSBC Australia blocks payments to crypto exchanges appeared first on CoinJournal.