Coinbase, according to a consent order signed by NYDFS Superintendent Adrienne Harris on January 4, 2023, settled with the NYDFS for $100 million by The company has agreed to pay the amount. The New York financial regulator said it detected compliance problems and inadequate anti-money laundering controls at the exchanges between 2020 and 2021.
New York regulators fine Coinbase $100 million for anti-money laundering compliance issues
Crypto exchange and custody company Coinbase (Nasdaq: COIN) has agreed to a $100 million settlement with New York’s top financial regulator NYDFS for failing to enact adequate anti-money laundering controls in 2020 and 2021. Coinbase agreed to pay a $50 million fine and another $50 million will be used to apply the required anti-money laundering (AML) background checks.
“Coinbase lacked sufficient personnel, resources, and tools necessary to keep up with these warnings, and the backlog quickly grew to unmanageable levels,” theconsent order signed by administrator Adrienne Harrisdetailed.” By the end of 2021, Coinbase had grown its backlog of unreviewed transaction monitoring alerts to over 100,000 (many of which were months old) and its backlog of customers requiring enhanced due diligence to over 14,000.”
Compliance investigations were initiated in 2020 and the alleged lack of control over background checks was initiated in 2018. Coinbase agreed at the time to hire an independent investigator to ensure AML and know-your-customer (KYC) guidelines were being followed. However, compliance issues continued and New York regulators decided to take action in 2021.” We have been very outspoken about our concerns about illicit financing in this space. That is why our framework holds crypto firms to the same standards as banks,” said Supervisor Harris.
Meanwhile, Coinbase shares COIN jumped on the news, rather than declining, as it increased 6.74% on Wednesday. Coinbase also responded to the settlement on its blogand said it has “committed to a $50 million compliance program investment over the next two years.”The message in the exchange’s blog post on the NYDFS settlement continues.
We view this settlement as an important step in our commitment to continuous improvement, engagement with key regulators, and promoting greater compliance in the crypto space – for ourselves and others.
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