The Central Bank of Ireland has fined Coinbase Europe Limited €21,464,734 for breaching its anti-money laundering and counter terrorist financing transaction monitoring obligations between 2021 and 2025.
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 (STR) with the national Financial Intelligence Unit (FIU) and Revenue Commissioners as soon as possible.
Coinbase Europe has been fined due to faults in the configuration of their transaction monitoring system, which resulted in more than 30 million transactions not being properly monitored over a 12-month period. The value of these transactions amounted to over €176 billion, and accounted for approximately 31% of all Coinbase Europe transactions conducted in the period when the faults existed.
Further, it took Coinbase Europe almost three years to fully complete the monitoring of the impacted transactions. This subsequent monitoring led to the reporting of 2,708 STRs to the FIU for further analysis and potential investigation.
The STRs submitted in respect of 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.
Coinbase Europe has accepted that it breached its transaction monitoring obligations under the CJA 2010 by failing to:
- Fully and properly monitor 30,442,437 transactions;
- Adopt internal policies, controls and procedures to prevent and detect the commission of money laundering and terrorist financing; and
- Conduct additional monitoring in respect of 184,790 transactions.
As part of the settlement agreement reached between the Central Bank and Coinbase Europe, the Central Bank has determined that sanctions comprising a reprimand and monetary penalty in the amount of €30,663,906 are warranted. The application of a 30% settlement scheme discount brings the amount to €21,464,734. The sanctions have been accepted by Coinbase Europe. The sanctions are subject to confirmation by the High Court and will take effect once confirmed.
