Malta Hits OKX with $1.2M Fine for AML Violations

• Malta’s FIAU imposed a $1.2 million fine on OKX for AML non-compliance.
• The penalty follows an April 2023 onsite compliance check that uncovered multiple breaches.

Malta’s Financial Intelligence Analysis Unit (FIAU) has imposed a $1.2 million fine on OKX’s local subsidiary for breaching the island nation’s anti-money laundering (AML) regulations. 

The penalty comes after an onsite compliance check held in April 2023, which revealed a number of breaches—some of which were considered serious and systemic, said a notice issued by the FIAU.

The fine represents a significant regulatory test for OKX, one of the world’s top cryptocurrency exchanges. The FIAU report identified weaknesses in risk assessment processes, specifically regarding the firm’s Business Risk Assessment (BRA) and customer due diligence policy.

Financial Intelligence Analysis Unit stated, 

“Notwithstanding, deficiencies were noted within the Company’s BRA methodology, making it unable to properly assess the risks of ML/FT it was exposed to and to adequately apply the required mitigating measures to manage them.”

Findings from the FIAU Investigation

The FIAU’s compliance review revealed multiple issues, including insufficient risk assessments on customer files. Half of the customer profiles under review lacked adequate risk assessment, calling into question the firm’s compliance with AML guidelines.

Moreover, the FIAU reported inconsistencies in oversight of high-value transactions. A few were higher than expected levels of activity. That most likely would have raised some questions needing a closer examination. 

While OKX’s business model focused mainly on European-based consumers, the FIAU highlighted the need to take into account possible exposure to money laundering risk from other jurisdictions.

Despite having a Business Risk Assessment (BRA) in place, the FIAU stated that OKX’s measures were inadequate in fully identifying and mitigating financial crime risks. The watchdog stressed that an effective BRA should continuously evaluate emerging threats and ensure compliance with Malta’s AML framework.

OKX’s Regulatory Standing in Europe

In spite of this regulatory blow, OKX has just obtained a MiCA (Markets in Crypto-Assets) license, enabling it to legally operate in 28 nations of the European Economic Area (EEA).

This development places OKX among the first crypto exchanges to secure approval under the new European Union regulatory framework, which seeks to harmonize crypto rules across member states. Furthermore, the MiCA license allows OKX to provide fully compliant services to more than 400 million prospective users across Europe.

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