The Central Bank of Ireland has fined Coinbase Europe 21.4 million euros ($24.6 million) for breaching its anti-money laundering (AML) and counter-terrorist financing transaction monitoring obligations from 2021 to 2025, the bank announced in a press release on Thursday.
Coinbase Europe was fined for a flaw in the configuration of its transaction monitoring system, which prevented more than 30 million transactions over a 12-month period from being properly monitored, the central bank said.
These transactions amounted to more than 176 billion euros ($203 billion) and accounted for about 31% of all Coinbase Europe transactions during the period the outage existed.
The Central Bank of Ireland further stated that it took nearly three years for Coinbase Europe to fully complete its oversight of the affected transactions. This subsequent surveillance resulted in the filing of 2,708 suspicious transaction reports (STRs) to the National Financial Intelligence Service for further analysis and potential investigation.
Colm Kincaid, deputy governor of the Central Bank of Ireland, said in a statement: “To effectively combat financial crime, law enforcement relies on regulated financial institutions to have systems in place to monitor transactions and report suspicions. When such systems fail within financial institutions, there are opportunities for criminals to evade detection, and they will take advantage of those opportunities.”
The STRs filed regarding transaction delay monitoring contained allegations related to serious criminal conduct, including: fraud/fraud; drug trafficking; cyber-attacks (malware/ransomware); and child sexual exploitation.
“The unique technical characteristics of cryptocurrencies, along with their anonymity-enhancing features and cross-border nature, make them particularly attractive to criminals looking to move funds. This is why it is especially important that companies involved in cryptocurrency services have strong controls in place to identify and report suspicious transactions,” Kincaid said.
In June this year, Coinbase moved its regulatory base from Ireland to Luxembourg, and the exchange is now licensed under the European Market in Cryptoassets (MiCA) regime.
Coinbase is said to have encountered some friction with the Bank of Ireland (BoI), but the exchange is not the only crypto company to have run into difficulties with the Bank of Ireland, according to people familiar with the matter.
Asked about the situation with the BoI in a recent interview, Tom Duff-Gordon, Coinbase’s vice president of international policy, said there was no particular reason for the exchange to leave Ireland and move to Luxembourg, noting that Luxembourg has relatively mature legislation, particularly in areas such as tokenization.
Regarding the Central Bank of Ireland, Duff Gordon said:
“Let’s just say that bank leaders historically haven’t necessarily recognized the value of this industry. But I think that’s changing and I think they’ve traveled on this topic. If you look at the speeches that policymakers have made over the past year and a half, I think they’re now becoming much more positive about the evolution of this market. But certainly they’re trending towards a more conservative side.”
Coinbase Europe acknowledged the specified violations and agreed to the undisputed facts set out in the settlement letter, the central bank said. This includes the application of a 30% payment scheme discount.
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