Coinbase Ireland Settlement: €21.5M Over Monitoring Errors
Background: Compliance Failures Lead to Record Settlement
Coinbase Europe Limited, the European branch of US-based crypto exchange Coinbase, has finalized a €21.5 million ($24.7 million) settlement with the Central Bank of Ireland. This agreement addresses compliance shortcomings that occurred between 2021 and 2022, when technical errors in Coinbase’s transaction monitoring software led to incomplete screening of certain cryptocurrency transfers.
According to Cointelegraph, the issue originated from three coding errors impacting five out of 21 compliance monitoring scenarios. As a result, some transactions involving crypto addresses separated by special characters were not fully checked for suspicious activity, as required by Anti-Money Laundering (AML) laws in Ireland.
Incident Details and Internal Response
Coinbase disclosed the detection of these monitoring failures in a blog post, noting the issue was identified through routine internal testing and remedied within several weeks. In response, the company conducted a comprehensive review of all affected transactions from 2021 to 2022.
During this period, approximately 185,000 transactions were flagged for review, with Coinbase Europe ultimately submitting around 2,700 Suspicious Transaction Reports (STRs) related to $15 million in transaction value. “These filings did not confirm illicit activity, but were made as required under Irish AML laws,” the company stated, reporting via Cointelegraph.
The total value of transactions affected by the technical errors was reported by the Irish Independent to exceed $202 billion, representing roughly 31% of all Coinbase Europe transactions in the period under review.
Regulatory Action and Strengthened Controls
The Central Bank of Ireland calculated the €21.5 million fine based on Coinbase Europe’s estimated average annual revenue in Ireland, which was reported at $480 million between 2021 and 2024. As an officially registered Virtual Asset Service Provider, Coinbase must operate systems that can reliably identify and report potential money laundering risks.
Following the settlement, Coinbase emphasized its commitment to regulatory obligations, declaring, “Coinbase recognizes the importance of effective AML procedures and takes our obligations under AML legislation and regulatory guidance very seriously.” To prevent similar compliance failures, the exchange has enhanced its Transaction Monitoring System. These upgrades consist of stricter review procedures before new code releases, wider scenario testing, and continuous improvements to the monitoring system to adapt to changing financial crime threats.
Looking Ahead: Ireland as Coinbase’s European Hub
Since opening its Dublin office in 2018, Coinbase Europe has expanded its regulatory footprint. The company secured an e-money license in 2019, joining a select few firms in Ireland to do so. In 2023, Coinbase designated Ireland as its principal European base ahead of the anticipated implementation of the EU’s Markets in Crypto-Assets (MiCA) regulation. This regulatory shift is expected to allow Coinbase to expand operations throughout all 27 EU member states, reinforcing its presence in the European cryptocurrency market.
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