Coinbase Agrees to $100Million Settlement with NYDFS for AML Violations

Coinbase, The American cryptocurrency exchange platform, has agreed to pay $100 million in a settlement with NYDFS with a $50 Million fine and $50 for applying background checks over AML violations

Coinbase has agreed on a settlement of $100 Million with NYDFS (New York Department of Financial Services) over violations of anti-money laundering laws, as per the consent order signed by Adrienne Harris, the NYDFS superintendent, on 4th January 2023. Compliance problems were detected in the exchange’s AML controls from 2020 through 2021. 

Coinbase has settled to pay a fine of $50 million, and another $50 million will go towards applying necessary AML background checks. 

“Coinbase lacked sufficient personnel, resources, and tools needed to keep up with these alerts, and backlogs rapidly grew to unmanageable levels,” the consent order signed by superintendent Adrienne Harris details. “By the end of 2021, Coinbase had a backlog of unreviewed transaction monitoring alerts grew to more than 100,000 (many of which were months old), and the backlog of customers requiring enhanced due diligence exceeded 14,000.”

The examination started in 2020, and the apparent lack the background inspection controls started in 2018. At that time, Coinbase arranged to employ an independent examiner for KYC (Know Your Customer) and AML guidelines. However, the problems persisted, and the regulator decided to take action in 2021.

According to the NYDFS superintendent, Harris, “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.”

Meanwhile, Coinbase’s stock currency, COIN, hopped on the news rather than fall, as the shares increased by 6.74% on Wednesday. Coinbase also answered the settlement through its blog post and mentioned that it has “committed to $50 million in compliance program investments over the next two years.”

“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.”

Suggested Read:

New York State Department Fines Robinhood $30m for Inadequate AML Compliance Measures

Crypto Industry Rejects New Rules to Report NFT and DeFi Transactions

Before you leave, we want to share some great news! 

ShuftiPro, the leading IDV service provider, has been nominated for the “Ultimate Fintech Awards MEA 2023.” Do show your support for us by voting in the category of “Best Fintech AI Solution,” “Best Regtech Reporting Solution,” and “Best Client Onboarding Solution” by clicking on the banner below: