Coding errors left gaps in anti-money laundering checks; exchange strengthens compliance systems after review
Coinbase Europe Limited, the European arm of the US-based crypto exchange, has paid a €21.5 million ($24.7 million) fine to the Central Bank of Ireland following transaction monitoring failures that occurred between 2021 and 2022. The penalty highlights how even leading exchanges are facing growing regulatory scrutiny over anti-money laundering (AML) compliance across Europe.
Coding errors exposed gaps in AML oversight
Coinbase revealed that technical coding errors caused its internal compliance software to only partially screen certain transactions for suspicious activity. The company identified the issue through internal testing and resolved it within weeks, later conducting a full review of all affected transactions.
Out of roughly 185,000 flagged transactions, Coinbase filed 2,700 suspicious activity reports covering around $15 million in total. While none of the flagged transactions were confirmed to be linked to illicit activity, the company said the reports were submitted as part of its obligations under Irish AML regulations.
According to local media reports, the value of all transactions during the period exceeded $202 billion, representing about 31% of Coinbase Europe’s total transaction volume.
Coinbase enhances compliance protocols
The Central Bank based its fine on Coinbase’s average annual revenue in Ireland, estimated at $480 million. Regulators cited three key coding errors across five monitoring “scenarios,” which failed to properly screen crypto addresses that contained special characters — a loophole that could have been exploited by bad actors.
In response, Coinbase said it has since enhanced its transaction monitoring systems, adding stricter pre-deployment reviews, expanded scenario testing, and continuous oversight.
“Coinbase recognizes the importance of effective AML procedures and takes our obligations under AML legislation and regulatory guidance very seriously,” the company said in a statement.
Coinbase established its Dublin office in 2018 and obtained an e-money license a year later, making it one of the few crypto firms registered in Ireland at the time. In 2023, it officially designated Ireland as its European hub ahead of the Markets in Crypto-Assets (MiCA) regulation rollout — legislation that will allow licensed firms to operate across all 27 EU member states.
The fine underscores the rising compliance expectations for global exchanges as Europe moves toward a more uniform regulatory framework for crypto oversight.
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