According to the New York Times, Coinbase will have to pay $50 million to New York regulators for letting users open accounts with minimal background confirmation. The organization will also spend $50 million on improving compliance.
Coinbase to pay regulators after KYC queries
Regulatory agencies discovered that Coinbase, a publicly traded crypto exchange in the United States, allowed users to open profiles without conducting extensive background inspections in a severe breach of anti-money-laundering legislation. It consented to pay a $50 million fine.
In addition to investing $50 million to strengthen its audit program, which is intended to deter drug dealers, child pornographers, and other potentially violent criminals from creating accounts with Coinbase, the digital currency platform will be required to comply with the terms of the resolution with the New York State Department of Financial Services, announced on Wednesday.
“Today, Coinbase and NYDFS have come to an agreement to settle an NYDFS investigation, disclosed in our 2021 annual 10K filings, into our historical compliance program. Coinbase has taken substantial measures to address these historical shortcomings and remains committed to being a leader and role model in the crypto space, including partnering with regulators regarding compliance.”Paul Grewal, Coinbase Chief Legal Officer.
According to regulators, the exchange obtained a license to conduct business in New York in 2017, and the compliance issues at Coinbase were first discovered through a routine evaluation in 2020. In 2018, they also found problems with the exchange’s anti-money-laundering restrictions.
Coinbase agreed to cooperate with AML regulations
At first, the crypto exchange agreed to bring its daily tasks into compliance with anti-money-laundering policies by working with a freelance consultant to assist in recognizing customers’ identities and keep an eye out for any unusual activities.
However, the firm’s issues remained unresolved, and in 2021, regulators formally began research. The exchange neglected two crucial tasks: investigating clients whose identities were initially ambiguous and following up on notifications for suspicious behaviour generated by its internal monitoring program.