LONDON, July 25 (Reuters) - A Coinbase business in

Britain has been fined for breaching a regulatory agreement to

improve its defences against financial crime, in the first

sanction of its kind in the UK cryptoassets sector.

The Financial Conduct Authority (FCA) said on Thursday that

CB Payments Limited (CBPL), a gateway for customers to trade

cryptoassets within the global Coinbase Group, voluntarily

agreed in October 2020 to make improvements to its financial

crime controls after a visit by the watchdog.

The agreement stipulated that CBPL could not accept new

high-risk customers until the issues were addressed. The

company, however, took on or provided e-money services to 13,416

such customers with nearly a third depositing a total of $24.9

million, the FCA said.

This money was used to execute multiple cryptoasset

transactions via other Coinbase entities, totalling about $226

million, the watchdog said, adding that repeated breaches of the

voluntary agreement went undiscovered for almost two years.

"CBPL's controls had significant weaknesses and the FCA told

it so, which is why the requirements were needed. CBPL, however,

repeatedly breached those requirements," Therese Chambers, joint

executive director of enforcement at the FCA, said on Thursday.

CBPL will pay a 3.5 million pound ($4.5 million) fine after

qualifying for a 30% discount by agreeing to resolve the case.

"We welcome regulation and are dedicated to working

proactively and closely with the most sophisticated financial

regulators in the world, including the FCA, to ensure we offer

the most compliant, trusted and secure platform for our

customers," Coinbase said on Thursday.

Kate Gee, a crypto litigation lawyer at Signature

Litigation, said the first fine of its kind was a warning for

firms to take financial crime controls very seriously.

"Firms that do not do enough to protect against financial

crime and who fail to comply with operational restrictions in

place will face scrutiny and enforcement action," Gee said.

($1 = 0.7762 pounds)