Malta Slaps OKX Crypto Exchange With $1,155,000 Fine Over Anti-Money-Laundering Violations

The crypto exchange OKX is dealing with more regulatory issues.

Malta’s Financial Intelligence Analysis Unit (FIAU) slapped the exchange with a €1.054 million fine ($1.155 million) for multiple compliance violations, including “failing to adequately assess” money-laundering/terrorism-financing risks associated with its products.

The FIAU, which probed the exchange in 2023, also claims OKX didn’t conduct reliable customer risk assessments (CRAs).

“The company was found to have failed to carry out a CRA upon establishing a business relationship for around 50% of the customer files reviewed as part of the compliance examination. Despite the company’s submissions that a CRA was conducted at onboarding for these customers, the evidence collected indicates that such clients had deposited thousands of dollars before a CRA was completed, with such assessment being conducted several months following onboarding.”

The Maltese regulator did commend OKX for “significant improvements undertaken and implemented over the past 18 months” but deemed that an administrative penalty was still required due to the exchange’s “serious and systematic” past failures.

OKX received its European Union (EU) Markets in Crypto Assets (MiCA) license in Malta earlier this year.

MiCA is new EU legislation that establishes rules covering the supervision, consumer protection and environmental safeguards of crypto assets.

The regulatory framework, which took effect in December, includes measures that aim to reduce financial crimes, including market manipulation, money laundering and terrorist financing. It also places stablecoin issuers under the European Banking Authority and requires them to hold sufficient liquid reserves.

In addition to the new FAIU fine, OKX has also gotten into hot water with other regulators recently regarding its decentralized exchange (DEX) aggregator.

Traders use data from DEX aggregators to find the best-priced trades across various decentralized exchanges.

In February, hackers stole a staggering $1.4 billion worth of Ethereum (ETH) and Lido Staked Ether (stETH) from the crypto exchange Bybit. Pseudonymous on-chain investigator ZachXBT linked the exploit to the Lazarus Group, an infamous North Korean cybercriminal outfit.

Ben Zhao, Bybit’s chief executive, said in March that $100 million worth of the stolen ETH was moved through OKX’s web3 proxy.

OKX said it detected a coordinated effort by the Lazarus Group to misuse its decentralized finance (DeFi) services and noted that it had made the “proactive decision” to temporarily suspend its DEX aggregator services after consulting with regulators.

Generated Image: Midjourney