KEY TAKEAWAYS
- Coinbase Europe Limited settled with the Central Bank of Ireland over transaction monitoring errors in 2021 and 2022.
- The settlement includes a €21.5 million fine, based on CBEL’s average annual revenue.
- Coinbase corrected coding errors in their Transaction Monitoring System, leading to 2,700 suspicious transaction reports.
- Coinbase is enhancing its compliance measures to prevent future errors and improve anti-money laundering procedures.
Coinbase Europe Limited (CBEL) has reached a settlement with the Central Bank of Ireland (CBI) regarding coding errors that affected transaction monitoring in 2021 and 2022. These errors led to partial screening of certain customer transactions, prompting CBEL to file approximately 2,700 suspicious transaction reports with the Irish government. The settlement was announced here.
The Central Bank of Ireland announced the settlement with CBEL, an affiliate of Coinbase that provides crypto services to European customers. The settlement involves a fine of €21.5 million, calculated based on CBEL’s average annual revenue of €417 million from 2021 to 2024.
Technical Errors and Their Resolution
As a registered crypto institution in Ireland, CBEL was required to monitor customer transactions using a Transaction Monitoring System (TMS). This system analyzes financial transactions to detect suspicious patterns. In 2021 and 2022, CBEL used 21 TMS scenarios to monitor transactions. However, three coding errors caused five of these scenarios to not fully screen all transactions.
These errors, such as overlooking crypto addresses separated by special characters, were identified and corrected by Coinbase within two to three weeks. CBEL then reprocessed the impacted transactions, identifying approximately 185,000 transactions for further investigation. Ultimately, CBEL filed around 2,700 Suspicious Transaction Reports (STRs) on transactions valued at €13 million.
Commitment to Compliance
Coinbase has taken steps to prevent similar errors in the future by enhancing testing and monitoring of TMS scenarios. This includes increased oversight of technical processes and investment in new scenarios to detect evolving high-risk activities. Coinbase emphasizes its commitment to effective anti-money laundering (AML) procedures and regulatory compliance.
Why This Matters: Impact, Industry Trends & Expert Insights
Coinbase Europe Limited’s settlement with the Central Bank of Ireland highlights significant compliance challenges in crypto transaction monitoring. The €21.5 million fine underscores the importance of robust systems to detect suspicious activity.
Recent industry reports indicate that the latest trends in crypto transaction monitoring emphasize a risk-based, technology-driven approach. This aligns with Coinbase’s efforts to enhance their Transaction Monitoring System (TMS) to prevent future errors, illustrating the industry’s shift towards integrating advanced analytics and AI for compliance.
As per insights from OneSafe, regulatory uncertainty remains a key challenge impacting Coinbase’s market valuation and operations. This supports the significance of Coinbase’s proactive measures to strengthen compliance and align with evolving regulations, as demonstrated by their recent settlement.
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