US Crypto Exchange Consents To $100M DFS Settlement For AML Compliance Failures

Takeaways

• Virtual currency licensees should ensure that their compliance programs – including with respect to anti-money laundering and cybersecurity – keep pace with the growth and any changes to their operations so as to avoid substantial alert backlogs.
• Risk assessments, independent testing, and prompt remediation are bedrock compliance tasks that the DFS expects every licensee to undertake without exception.
• DFS continues to levy significant sanctions for violations of its regulations, including, as was the case here, a steep civil penalty and the imposition of an independent consultant or monitor.

On January 4, 2023, the New York State Department of Financial Services ("DFS") announced that Coinbase, Inc., a major U.S. cryptocurrency exchange, will pay a $50 million penalty and invest an additional $50 million in its compliance function over the next two years to remediate significant violations of the New York Banking Law and the DFS virtual