Coinbase has reached a $100 million settlement with the New York State Department of Financial Services (DFS), which accused it of breaking virtual currency, money transmission, transaction monitoring, and cybersecurity standards. “These deficiencies placed the Coinbase platform open to severe criminal behaviour, including instances of fraud, probable money laundering, suspected child sexual abuse material-related activities, and potential narcotics trafficking,” according to the FBI. The corporation will pay a $50 million fine to the state as well as spend $50 million to fix the concerns raised by the regulator and comply with a DFS-approved plan.
According to the government, Coinbase’s policies on due diligence, transaction monitoring, and sanctions compliance (among other things) were “inadequate for a financial services provider of Coinbase’s size and complexity.” It accused the corporation of failing to do adequate background checks on consumers before opening accounts and of failing to respond to transaction monitoring system (TMS) notifications. The DFS also said that Coinbase had a months-long TMS backlog, implying that the business “routinely failed to investigate and report suspicious activities as required by law.”
