TL;DR
- Coinbase will pay a $24.7 million fine to the Central Bank of Ireland over technical errors in its transaction monitoring system.
- Three coding bugs in its Transaction Monitoring System prevented a full review of five out of 21 control scenarios.
- The exchange has strengthened its compliance protocols with more testing, enhanced monitoring, and new automated measures.
Coinbase Europe Limited, the European subsidiary of the U.S. exchange, has agreed to pay a €21.5 million ($24.7 million) fine to the Central Bank of Ireland due to technical errors that affected its monitoring system between 2021 and 2022.
What Happened?
The issues stemmed from three coding bugs in its Transaction Monitoring System (TMS), a tool used to analyze transactions for suspicious activity. Five of the 21 control scenarios failed to fully review all transactions, missing some cryptocurrency addresses separated by special characters. Coinbase discovered the flaw during internal audits, fixed it in less than three weeks, and reprocessed the affected transactions.
A subsequent analysis identified about 185,000 transactions that required additional review out of a total of 97 million processed. After that evaluation, the company filed roughly 2,700 suspicious activity reports with the Irish government, covering 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. According to the Irish Independent, the reviewed transactions accounted for $202 billion, or roughly 31% of the subsidiary’s total volume during that period.
Coinbase Strengthens Its Compliance Framework
In its statement, the company said it has strengthened its compliance systems to prevent similar issues in the future. The measures include stricter pre-deployment testing, enhanced supervision of monitoring scenarios, and automated mechanisms to detect risk patterns. Coinbase also increased internal oversight of its compliance systems and revised its technical control procedures.
The exchange emphasized that it complies with anti-money laundering (AML) laws and that cooperation with regulators remains a priority. 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
