- Cryptocurrency exchange OKCoin Europe Ltd has been fined over €1 million by the Financial Intelligence Analysis Unit (FIAU) for risk assessment failures.
- The company failed to properly assess money laundering risks and scrutinize transactions worth more than $20 million for approximately 80% of reviewed customer files.
- The fine follows a previous €304,000 penalty from the Malta Financial Services Authority (MFSA) in January 2023.
The Financial Intelligence Analysis Unit (FIAU) has imposed an administrative penalty of €1,054,269 on cryptocurrency exchange OKCoin Europe Ltd for significant risk assessment failures. The fine follows an onsite compliance examination conducted in April 2023, according to information posted on the FIAU website today. The company, licensed as a virtual asset service provider (VASP), has reportedly remedied the identified deficiencies.
The decision remains subject to appeal. The FIAU noted that while OKCoin had attempted to create a business risk assessment to identify potential threats, the methodology was inadequate. This prevented the company from properly assessing and mitigating money laundering and terrorism financing risks it faced.
Significant Transaction Monitoring Failures
The examination revealed that OKCoin failed to conduct risk assessments for approximately half of the customer files reviewed. Additionally, the company didn’t adequately scrutinize transactions for about 80% of the customer files examined, with these transactions collectively exceeding $20 million.
One notable case involved a customer onboarded in June 2019 with a low-risk rating. The client, who worked in IT and cited investments as their funding source, initially estimated monthly deposits of €100,000. After limited activity in 2019 and 2020 (under $50,000 total deposits), the customer made cryptocurrency deposits of approximately $1.8 million over less than four months in 2021.
Previous Regulatory Actions
The FIAU highlighted that OKCoin’s scrutiny of these high-value deposits was insufficient. When the company eventually questioned the customer about the purpose and funding source, it received only brief, unsubstantiated responses. It wasn’t until October 2022, over a year after the customer’s last activity, that the company conducted an ad-hoc risk review and froze the account when documentation requests went unanswered.
This penalty follows a previous regulatory action in January 2023, when the Malta Financial Services Authority (MFSA) reached a settlement agreement with OKCoin Europe. The company paid a €304,000 administrative penalty and agreed to appoint an independent third-party service provider to review its governance arrangements.
Despite these failures, the FIAU acknowledged that OKCoin has taken a proactive approach to address the shortcomings identified during the compliance examination.
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