New York’s financial regulator said compliance issues were detected and the exchange’s anti-money laundering controls were inadequate from 2020 to 2021.
New York regulator fines Coinbase $100 million for anti-money laundering compliance issues.
Crypto-currency exchange and depository Coinbase has agreed to a $100 million settlement with New York’s top financial regulator, the NYDFS, for failing to implement appropriate anti-money laundering controls in 2020 and 2021. Coinbase agreed to pay a $50 million fine and an additional $50 million will be spent on implementing the necessary anti-money laundering (AML) background checks.
“Coinbase did not have enough staff, resources, and tools to track these alerts, and the backlog quickly reached unmanageable levels“, said the. consent order signed by Director Adrienne Harris details. “By the end of 2021, Coinbase had a backlog of unreviewed transaction monitoring alerts that totaled more than 100,000 (many of which were months old), and the backlog of customers requiring enhanced due diligence exceeded 14,000.“
The compliance investigation began in 2020 and the alleged lack of background checks began in 2018. Coinbase agreed at the time to hire an independent reviewer to ensure anti-money laundering and know-your-customer (KYC) guidelines were met. However, compliance issues persisted and the New York regulator decided to take action in 2021. “We’ve been very outspoken about the concerns of illicit financing in the space. That’s why our framework holds crypto-currency companies to the same standards as banks“, said Superintendent Adrienne Harris.
Meanwhile, Coinbase’s COIN stock jumped on the news rather than falling, with shares rising 6.74 percent on Wednesday. Coinbase responded to the settlement on its blog and said it had “Committed to investing $50 million in a compliance program over the next two years“. The exchange’s blog post about the NYDFS settlement continues:
We view this resolution as a critical step in our commitment to continuous improvement, our engagement with key regulators, and our push for greater compliance in the crypto space – for ourselves and others.