New York's Department of Financial Services
(“DFS”)
recently announced a $100 million settlement with
Coinbase, Inc., one of the world's largest cryptocurrency
exchanges, for Bank Secrecy Act/Anti-Money Laundering
(“BSA/AML”) compliance failures, which could have broad
impact on both the fiat currency and cryptocurrency (digital
assets) communities. DFS found a broad range of significant
failures in the customer identification program
(“CIP”)/customer due diligence (“CDD”),
transaction monitoring, suspicious activity reporting, politically
exposed person (“PEP”) screening, and cyber event
reporting. DFS indicated Coinbase's BSA/AML compliance
program failed to keep up with Coinbase's growth, despite
working with an independent monitor since early 2022. As a result,
Coinbase will pay a $50 million penalty and invest an additional
$50 million in its BSA/AML compliance program. While directed at
crypto exchanges and relevant to the blockchain industry, this
settlement
