Key Highlights
- •Coinbase settled with the Central Bank of Ireland (CBI) for €21.5 million over three technical coding errors in its Transaction Monitoring System (TMS).
- •These errors led to the partial screening of certain crypto addresses and transactions between 2021 and 2022.
- •Coinbase has since rectified the errors and enhanced its TMS testing and oversight procedures.
Coinbase has acknowledged the €21,464,734, approximately $24 million, fine imposed by the Central Bank of Ireland (CBI). The company stated that the issue originated from technical coding errors within its Transaction Monitoring System (TMS) that occurred between 2021 and 2022.
In a statement, the company confirmed that its Irish subsidiary, Coinbase Europe Limited (CBEL), collaborated fully with regulatory authorities and identified the bug internally before implementing a fix.
Coinbase clarified that the errors affected five out of the 21 TMS scenarios used for screening customer transactions. This resulted in certain crypto addresses, particularly those containing special characters, being only partially monitored.
The Central Bank of Ireland had previously fined Coinbase Europe after determining that the company had failed to adequately monitor over 30 million transactions, valued at approximately €176 billion, between 2021 and 2022. Regulators indicated that these lapses constituted significant breaches of anti-money laundering (AML) obligations, leaving a substantial portion of Coinbase Europe's activities insufficiently scrutinized for potential criminal risks.
Coinbase Enhances Compliance Procedures Following Technical Errors
Upon identification, Coinbase reported that the issue was resolved within weeks, and all affected transactions were reprocessed through the corrected TMS.
During the period in question, CBEL processed an estimated 97 million crypto transactions. A review identified approximately 185,000 transactions requiring further investigation. Of these, about 2,700 transactions were subsequently the subject of suspicious transaction reports filed with Irish authorities, with a total value of around €13 million.
Both the regulator and Coinbase emphasized that the filing of a suspicious transaction report does not automatically imply wrongdoing. Such reports are mandated by law whenever there is a reasonable basis for concern.
Coinbase has since strengthened its compliance checks. This includes improving the testing of its Transaction Monitoring System before implementing any code changes, increasing oversight, and introducing new tools to detect emerging risks.
The company stated that these measures are designed to prevent the recurrence of similar errors. Coinbase reiterated its commitment to "the importance of effective AML procedures and takes our obligations under AML legislation and regulatory guidance very seriously."