THE CENTRAL BANK has fined cryptocurrency firm Coinbase Europe €21.5 million for anti-money laundering failures.

The Central Bank found that Coinbase Europe breached its anti-money laundering and counter-terrorist financing transaction monitoring obligations between 2021 and 2025.

Coinbase Europe, which is part of the Coinbase Group, provides crypto asset and wallet services to customers globally to facilitate their use of the Coinbase Group’s trading platform to buy and sell crypto.  

This is the Central Bank’s first enforcement outcome in the crypto sector.

A spokesperson from the Central Bank noted that as a “virtual asset service provider”, Coinbase Europe is required to monitor customer transactions on an ongoing basis.

Where Coinbase Europe suspects that a transaction is facilitating money laundering or terrorist financing, it is required to file a Suspicious Transaction Report with the national Financial Intelligence Unit and Revenue Commissioners as soon as possible. 

However, the Central Bank said there was a 12-month period where over 30 million transactions were not being properly monitored due to faults in the configuration of their transaction monitoring system.

The value of these transactions amounted to over €176 billion and accounted for around 31% of all Coinbase Europe transactions conducted in the period when the faults existed. 

It then took Coinbase Europe close to three years to fully complete the monitoring of these impacted transactions.

This subsequent monitoring led to the reporting of over 2,700 Suspicious Transaction Reports for further analysis and potential investigation.

The reports submitted over the late monitoring of the transactions contained suspicions associated with serious criminal activities including: money laundering; fraud/scams; drug trafficking; cyber-attacks (malware/ransomware); and child sexual exploitation.

The Central Bank said that the monitoring of these transactions in real time and the filing of Suspicious Action Reports “without delay is a cornerstone of the effectiveness and efficiency” anti-money laundering and combatting terrorist financing obligations.

Failure to do so can seriously hinder how the regulatory and criminal justice system can detect, report, disrupt, investigate and prosecute criminality. 

Monitoring failures

Coinbase Europe has accepted that it breached its transaction monitoring obligations by failing to fully and properly monitor over 30 million transactions.

It also accepts that it failed to adopt internal policies, controls and procedures to prevent and detect the commission of money laundering and terrorist financing.

It further accepted that it failed to conduct additional monitoring in respect of close to 185,000 transactions.

As part of the settlement agreement reached between the Central Bank and Coinbase Europe, the Central Bank determined that a fine of close to €31 million was warranted.

However, the application of a 30% settlement scheme discount brought the amount to €21.5 million.

The sanctions have been accepted by Coinbase Europe and are subject to confirmation by the High Court and will take effect once confirmed.  

Colm Kincaid, deputy governor of consumer and investor protection at the Central Bank, remarked that “law enforcement agencies rely on regulated financial institutions to have systems in place to monitor transactions and report suspicions”.

He said the failure of such a system within any financial institution creates an opportunity for criminals to evade detection and criminals will take that opportunity. 

Kincaid added: “Crypto has particular technological features which, together with its anonymity-enhancing capabilities and cross-border nature, makes it especially attractive to criminals looking to move their funds.

“This is why it is especially important that firms engaged in crypto services have robust controls in place to identify and report suspicious transactions.

“Where system failures do occur, it is imperative that they are reported to the Central Bank without delay so that appropriate actions can be taken to manage and mitigate the risk.”