AML System Oversight Issues
Coinbase Europe Limited (CBEL) has settled with the Central Bank of Ireland (CBI) over coding errors in its anti-money laundering (AML) transaction monitoring system that left some crypto transactions partially unscreened between 2021 and 2022.
As part of the settlement, Coinbase agreed to pay a €21.5 million fine.
According to the CBI, the issue arose from three coding errors in Coinbase’s Transaction Monitoring System (TMS), which caused five out of 21 monitoring scenarios to overlook certain transactions, particularly those involving crypto addresses separated by special characters.
These technical flaws meant some transactions were not fully screened for suspicious activity as required under AML regulations.
Internal Resolution and Retrospective Review
Coinbase stated that it identified and resolved the issue internally within weeks, emphasizing that its other compliance systems continued to operate normally during this period.
Following the fix, the company conducted an extensive retrospective review of all affected transactions, reprocessing approximately 185,000 transactions out of nearly 97 million processed in total during the timeframe.
Suspicious Transaction Reports and Regulatory Context
The review led Coinbase to file around 2,700 Suspicious Transaction Reports (STRs) with Irish authorities, covering transactions worth roughly €13 million. Both Coinbase and the CBI clarified that these reports do not confirm any criminal activity; they were filed because the transactions met the regulatory threshold for suspicion under AML laws.
The regulator calculated the fine based on CBEL’s average annual revenue of €417 million for the period from 2021 to 2024.
Commitment to Compliance
Coinbase has since implemented stronger compliance oversight, enhanced testing and monitoring of its TMS scenarios, and introduced additional safeguards to prevent similar issues in the future.
In a statement, Coinbase said it “takes its anti-money laundering obligations extremely seriously” and remains committed to maintaining the most trusted, compliant, and secure crypto platform globally.
The CBI confirmed that the settlement closes its investigation into the matter.