- Coinbase failed to monitor over 30 million transactions.
- The exchange has already rectified its monitoring regime.
On Thursday, the Central Bank of Ireland fined Coinbase’s European entity nearly $25 million for failing to implement effective monitoring measures to flag illicit financial activity on the exchange.
Between 2021 and 2022, Coinbase failed to fully monitor over 30 million transactions on the platform worth over $202 billion, according to the bank.
The central bank indicated that this figure accounted for more than a third of Coinbase’s transaction activity in Europe.
Colm Kincaid, the central bank’s deputy governor for consumer and investor protection, said that financial institutions must report any suspicious activity.
“Crypto has particular technological features which, together with its anonymity-enhancing capabilities and cross-border nature, makes it especially attractive to criminals looking to move their funds,” Kincaid said.
“This is why it is especially important that firms engaged in crypto services have robust controls in place to identify and report suspicious transactions.”
The crypto exchange won’t pay the $25 million fine until they are confirmed by Ireland’s High Court.
Coding errors
Coinbase retroactively reviewed these transactions and reported 2,708 suspicious transactions amounting to roughly $15 million to the Financial Intelligence Unit.
These transactions were suspected of having ties to drug trafficking, child sexual exploitation, and money laundering.
The company also offboarded some customers due to their involvement in suspicious transactions.
Neither the bank nor Coinbase can say that these transactions actually resulted in criminal activity, a company blog on Thursday read.
Coinbase said the oversight was due to coding errors during the setup of its transaction monitoring system.
Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.