Coinbase Europe Limited, the European subsidiary of the U.S.-based cryptocurrency exchange, has agreed to pay a €21.5 million ($24.7 million) fine to the Central Bank of Ireland for failures in its anti-money laundering (AML) transaction monitoring system between 2021 and 2022.
The issues stemmed from three coding bugs in its Transaction Monitoring System (TMS), which prevented a full review of five out of 21 control scenarios. This led to approximately 185,000 transactions requiring additional review out of a total of 97 million processed during the period. The affected transactions accounted for around 31% of Coinbase Europe's total volume, valued at over €176 billion.
Coinbase discovered the flaws during internal audits and fixed them within three weeks. The exchange subsequently conducted retrospective monitoring, which took nearly three years to complete, resulting in the filing of about 2,700 suspicious activity reports with the Irish Financial Intelligence Unit. These reports covered suspicions of money laundering, fraud, drug trafficking, cyber-attacks, and child sexual exploitation, with a combined amount of €13 million. Authorities clarified that these reports do not imply confirmed criminal activity.
The fine was calculated based on Coinbase's average annual revenue in Ireland, estimated at €417 million between 2021 and 2024. The settlement reduced the original sanction from almost €31 million under the Central Bank's 30% discount scheme. The High Court must confirm the sanctions for them to take effect.
In response, Coinbase has strengthened its compliance protocols, implementing stricter pre-deployment testing, enhanced monitoring scenarios, and automated mechanisms to detect risk patterns. The company emphasized its commitment to AML laws and cooperation with regulators. Coinbase has operated in Ireland since 2018, obtained an e-money license in 2019, and established its European headquarters there in 2023 in anticipation of MiCA regulation.
Colm Kincaid, deputy governor for consumer and investor protection at the Central Bank of Ireland, stated, "To be effective in combating financial crime, law enforcement agencies rely on regulated financial institutions to have systems in place to monitor transactions and report suspicions. The failure of such a system within any financial institution creates an opportunity for criminals to evade detection – and criminals will take that opportunity."
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