Ireland Fines Coinbase €21.5M for AML Compliance Failures

The Central Bank of Ireland has imposed a €21.5 million, worth $25 million fine on Coinbase Europe, an Irish subsidiary of Coinbase Global. 

The fine comes from major failures in the company’s transaction monitoring systems. These lapses left billions of euros in crypto transactions unchecked for possible money laundering and terrorist financing risks.

Coinbase Faces Heavy Fine Over Major Monitoring Failures

According to the Central Bank, Coinbase Europe failed to properly monitor over 30 million transactions valued at more than €176 billion between 2021 and 2022. The fine comes from major failures in the company’s transaction monitoring systems. 

These lapses left billions of euros in crypto transactions unchecked for possible money laundering and terrorist financing risks. It took Coinbase nearly three years to fully review the affected transactions. 

During this process, the company flagged 2,708 suspicious transactions to authorities for further investigation. These transactions were linked to suspected money laundering, fraud, drug trafficking, cyberattacks, and child exploitation, according to the regulator.

This is not the first time Coinbase has been fined. In fact, regulators in other countries have also penalized the company before for issues related to compliance and customer protection.

In 2023, the New York State Department of Financial Services fined Coinbase a total of $100 million. The fine was for failing to properly monitor suspicious transactions and for weak anti-money laundering controls.

Coinbase Fixes Coding Errors Behind €13M Monitoring Lapse

In a public statement, Coinbase admitted that the lapse was caused by three coding errors in its monitoring software. These errors affected five out of 21 automated scenarios designed to detect suspicious behavior.

The company said the coding problems were fixed within two to three weeks of being discovered. Coinbase also noted that there is no confirmed evidence linking the flagged €13 million worth of transactions to any criminal activity. 

The company stressed that the issue was primarily related to system configuration errors rather than wrongdoing.

To prevent similar issues in the future, Coinbase said it has improved its testing and monitoring systems. The company also enhanced its internal controls to better detect and manage financial crime risks.

Regulator’s Warning to the Crypto Sector

The Central Bank of Ireland reduced the fine from €30.7 million as part of a settlement agreement. Despite the discount, Deputy Governor Colm Kincaid stressed that the case was very serious. 

He warned that weak anti-money-laundering systems can make it easier for criminals to misuse financial platforms. He stressed that strong compliance and careful monitoring are so important in the crypto sector.

The case also fits into a larger global trend. Regulators in many countries are becoming tougher on crypto exchanges, asking them to follow stricter rules to stop money laundering, fraud, and other cybercrimes. 

As digital assets become more common, authorities want crypto firms to follow the same high standards as traditional banks.