Key Details of the Fine
The Central Bank of Ireland has levied a fine of €21.5 million (approximately $24.8 million) against Coinbase Europe for breaches related to anti-money laundering (AML) and counter-terrorist financing (CFT) regulations.
This marks the first instance of legal enforcement by Ireland against a cryptocurrency firm. The penalty stems from an investigation into transaction monitoring failures that occurred between 2021 and 2022.
Impact of System Faults on Transactions
According to the Central Bank of Ireland, configuration errors within Coinbase Europe's transaction monitoring system impacted over 30 million transactions across a 12-month period. The cumulative value of these transactions surpassed €176 billion, which represented approximately 31% of all transactions processed during that timeframe.
Regulators emphasized that virtual asset service providers are obligated to actively monitor all customer transactions. When a transaction raises concerns about potential money laundering or terrorist financing, companies are required to submit a Suspicious Transaction Report to Ireland's Financial Intelligence Unit and the Revenue Commissioners.
Coinbase Europe undertook a comprehensive re-examination of the affected transactions, a process that took over three years to complete. This review led to the submission of 2,708 Suspicious Transaction Reports to the Financial Intelligence Unit for further assessment and potential investigation.
Coinbase's Corrective and Preventive Actions
In response to the findings, Coinbase has implemented a series of defensive measures designed to prevent the recurrence of similar errors. The company has also enhanced its testing and monitoring systems to identify potential issues proactively before deploying any code-related modifications.
Furthermore, Coinbase has strengthened the oversight of its transaction-monitoring systems, aiming to provide greater control and visibility over system performance.
Coinbase has acknowledged the confirmed violations and accepted the factual findings presented in the Central Bank's Settlement Notice. Under the terms of the agreement between Coinbase and the Central Bank, the total sanction initially included a formal reprimand and a monetary fine of €30,663,906.
Following the application of a 30% settlement discount, the final penalty was reduced to €21,464,734. Coinbase Europe has accepted these sanctions, and the fine will become legally enforceable upon approval by the High Court.