• Coinbase has reached an agreement with the New York Department of Financial Services (NYDFS) to pay $100 million to improve its account and background checks.
• Half of the settlement will go into paying a $50 million fine, while the other half will go towards improving the company’s compliance program.
• The NYDFS found that Coinbase allowed bad actors to use its platform to launder money and had failures in its anti-money laundering controls dating back to 2018.
Coinbase, a major cryptocurrency exchange, has recently reached an agreement with the New York Department of Financial Services (NYDFS) to pay $100 million in order to improve its account and background checks. This settlement comes after the financial regulator found serious flaws in the company’s anti-money laundering (AML) regulations, which allowed bad actors to use its platform to launder money.
The $100 million will be split in half, with $50 million being used to pay a fine and the other half being used to improve the company’s compliance program. The financial regulator determined that Coinbase had not been following the same standards as U.S. banks, with issues in the company’s AML controls dating as far back as 2018.
In order to address these issues, the NYDFS has mandated that Coinbase hire an independent firm to review its compliance program and to ensure that all AML regulations are being followed. Adrienne Harris, Superintendent of Financial Services for the state of New York, said: “We found failures that really warranted putting in place an independent monitor rather than wait for a settlement. We have been very outspoken about illicit financing concerns in the space. It is why our framework holds crypto companies to the same standard as for banks.”
The settlement between Coinbase and the NYDFS comes as a warning to other cryptocurrency exchanges that they must adhere to the same standards as banks when it comes to AML regulations. In addition, it serves as a reminder that the cryptocurrency market is becoming increasingly regulated and companies must take the necessary steps to ensure they are meeting the requirements of the law.