Coinbase Fined €21.5M by Irish Central Bank for AML Breaches

The Central Bank of Ireland’s investigation revealed that between 2021 and 2022, more than 30 million transactions valued at over €176 billion went improperly monitored, representing approximately 31% of all Coinbase Europe transactions during this period. According to Colm Kincaid, CBI’s deputy governor for consumer and investor protection, the failure of such monitoring systems within any financial institution creates opportunities for criminals to evade detection. ‘Criminals will take that opportunity,’ Kincaid emphasized in the regulator’s official statement, underscoring the seriousness of the compliance breakdown.

The monitoring failures stemmed from coding errors in five out of 21 Transaction Monitoring System (TMS) scenarios that Coinbase Europe was required to maintain as a registered crypto institution in Ireland. These technical flaws caused certain transactions, particularly those involving special character crypto addresses, to be overlooked entirely. The scale of the oversight meant that nearly one-third of the exchange’s European transaction volume operated without proper AML scrutiny for two critical years.

It took Coinbase Europe nearly three years to complete retrospective monitoring of the affected transactions, a process that ultimately led to the submission of 2,708 Suspicious Transaction Reports (STRs) to Ireland’s Financial Intelligence Unit. These reports flagged potential criminal activities including money laundering, fraud, drug trafficking, cyber-attacks, and child sexual exploitation. The exchange’s corrective measures involved running impacted transactions through the corrected TMS, which identified 185,000 transactions requiring further compliance investigation.

While the 2,708 STRs represented only a fraction of the originally unmonitored transactions, they highlighted significant potential criminal exposure. Both the Central Bank of Ireland and Coinbase have declined to confirm whether actual criminal activity occurred as a result of the monitoring gaps. The substantial number of STRs filed, however, demonstrates the serious nature of the compliance failures and the potential risks that went undetected during the two-year monitoring breakdown.

The €21.5 million fine represents a 30% reduction from the original €31 million sanction under the CBI’s discount scheme for cooperation and remediation. Coinbase Europe agreed to comprehensive reforms including enhanced TMS oversight, development of new detection scenarios, and strengthened internal testing protocols. The settlement requires confirmation from Ireland’s High Court before taking full effect, though Coinbase has already implemented many of the required improvements.

In its official statement, Coinbase acknowledged the importance of effective AML procedures, stating: ‘Our goal has always been and will always be to build the most trusted, compliant, and secure platform in the world.’ The exchange emphasized that it takes its obligations under AML legislation and regulatory guidance very seriously. The case represents a watershed moment for cryptocurrency regulation in Ireland, establishing a precedent for how regulators will approach AML enforcement in the digital asset space.

The enforcement action signals growing regulatory scrutiny of cryptocurrency exchanges’ compliance frameworks, particularly as digital assets become more integrated into mainstream financial systems. For Coinbase, which operates across multiple jurisdictions, the Irish penalty underscores the importance of maintaining consistent AML standards globally, especially as European regulators intensify their focus on cryptocurrency oversight and enforcement.