OKX Fined €1.1M by Malta for 80% AML Failures

Maltese regulators have imposed a significant fine on the global cryptocurrency exchange OKX for violations of anti-money laundering (AML) regulations. The Financial Intelligence Analysis Unit (FIAU) of Malta, the country's anti-money laundering watchdog, issued a €1.1 million ($1.2 million) penalty to OKCoin Europe, a subsidiary of OKX. The fine was levied after an inspection in 2023 revealed multiple AML failures, including the inadequate scrutiny of $20 million (€18 million) worth of transactions in 80% of the customer files reviewed. The FIAU's investigation found that OKCoin Europe had not properly identified the money-laundering risks associated with its product offerings and had failed to conduct risk assessments for approximately half of the customer files examined.

The FIAU's report highlighted several anomalies, such as unexplained or high spikes in deposits over short periods and sudden surges in activity by certain clients after periods of dormancy. In one instance, a client made cryptocurrency deposits totaling $1.8 million over four months in 2021, despite having only deposited $50,000 in the previous two years. These high-value transactions were not thoroughly scrutinized at the time. Additionally, the FIAU discovered that identity verification documents for some clients had expired for up to two years, indicating that OKCoin had not taken the necessary steps to obtain updated and valid documents.

OKCoin, which is in the process of rebranding to OKX, acknowledged the historical gaps in its compliance framework and stated that it had taken proactive measures to enhance its internal processes and strengthen its AML controls. Over the past two years, the company implemented a comprehensive compliance program, including technology upgrades, enhanced monitoring, and robust remediation efforts. The FIAU's final compliance review report recognized OKCoin's significant improvements and commitment to compliance.

This is not the first time OKCoin has faced regulatory scrutiny in Malta. Last year, the Malta Financial Services Authority (MFSA) also fined the company €304,000 for regulatory failings. As part of the settlement, OKCoin agreed to pay the administrative penalty and implement several measures, including the appointment of an independent third-party service provider to review the adequacy of its governance arrangements. The constitutional court's overturning of a ruling that limited the FIAU's ability to issue fines in November further underscored the regulatory body's authority to enforce AML compliance.

The fine imposed on OKX serves as a reminder of the stringent AML regulations that cryptocurrency exchanges must adhere to. The incident highlights the importance of robust compliance frameworks and continuous monitoring to prevent money laundering activities. OKX's proactive measures to address the identified issues and its commitment to compliance demonstrate its efforts to build a secure and transparent platform for its users worldwide.