Coinbase’s United Kingdom arm was fined $4.5 million by a British regulator for breaching a voluntary agreement related to user onboarding.

In 2020, CB Payments Limited (CBPL), part of the Coinbase Group, entered a voluntary agreement with Britain’s Financial Conduct Authority (FCA) that would prevent it from onboarding customers considered ‘high risk’ by the regulator.

Yet, CBPL has allegedly onboarded 13,416 customers that the FCA considered high-risk, and offered cryptocurrency services to them, which was also prohibited by the agreement. The British regulator fined Coinbase Group’s CBPL 3,503,546 pounds ( $4.5 million), for “repeatedly breaching” the agreement.

The lack of controls raises potential money laundering risks, according to Therese Chambers, joint executive director of enforcement and market oversight at the FCA, who said in a July 25 statement:

“CBPL's controls had significant weaknesses and the FCA told it so, which is why the requirements were needed. CPBL, however, repeatedly breached those requirements. This increased the risk that criminals could use CBPL to launder the proceeds of crime. We will not tolerate such laxity, which jeopardizes the integrity of our markets.”

The British regulator’s decision could mean more scrutiny for other cryptocurrency exchanges in the region and lead to platforms seeking more crypto-friendly regulatory jurisdictions.

Related: Galaxy Asset Management raises $113M for new crypto venture

This is a developing story, and further information will be added as it becomes available.