CBI Fines Coinbase €21.5M for AML Compliance Failures
The Central Bank of Ireland fined Coinbase Europe €21.5M for AML compliance failures and transaction monitoring lapses between November 2021 and December 2022. Regulators identified five breaches, including coding errors in Coinbase’s monitoring system that left over 30 million transactions worth €176 billion unmonitored. Of these, 2,708 transfers were flagged as suspicious for money laundering, fraud, drug trafficking, cybercrime and child exploitation. Coinbase corrected the errors within weeks and enhanced its AML testing and screening procedures. The original €30.7M penalty was reduced following a settlement reflecting the firm’s €417M average annual revenue. Coinbase Europe must complete a remediation plan by July 2024 and strengthen its AML compliance framework within a year. This enforcement action underscores the importance of robust transaction monitoring and may prompt crypto exchanges to review AML compliance, affecting market trust and trading volumes.
Neutral
Although the €21.5M fine creates short-term negative sentiment around Coinbase and highlights regulatory scrutiny of AML compliance, the swift remediation and reduced penalty signal robust risk management. Enhanced transaction monitoring and a clear compliance roadmap can bolster market trust. Thus, while traders may see temporary caution, the impact on Coinbase’s market position and trading volumes is likely neutral in the long run.