• Coinbase has reached an agreement with the New York Department of Financial Services that will see it 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 be used to improve its compliance program.
• The New York State regulator determined that Coinbase allowed bad actors to use its platform to launder money, and thus required an independent monitor to be put in place.
Crypto exchange Coinbase has reached an agreement with the New York Department of Financial Services (NYDFS) that will see it pay around $100 million to improve its account and background checks. This settlement follows an investigation by the NYDFS that began in 2021, but detected issues with the company’s anti-money laundering controls dating back to 2018.
Coinbase has agreed to pay a $50 million fine as part of the settlement, with the other $50 million going towards improving its compliance program. The NYDFS found that Coinbase had allowed bad actors to use its platform to launder money, and thus required an independent monitor to be put in place. 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.”
As part of the agreement, Coinbase will be required to implement stronger anti-money laundering controls, including enhanced customer due diligence, transaction monitoring, and customer risk profiling. The company will also have to provide regular reports to the NYDFS regarding its compliance with the agreement.
Coinbase has committed to improving its compliance program to ensure that it meets the same standards as other U.S. banks. The company will be investing heavily in its compliance program, and is expected to use the $50 million to hire independent firms to assist in this effort.
This agreement serves as a reminder that cryptocurrency companies must comply with the same regulations and standards as traditional financial institutions. Coinbase is the latest in a series of crypto companies that have been subject to investigations and enforcement actions by the NYDFS, and the settlement serves as a reminder that the regulator takes money laundering and other financial crimes seriously.