Crypto-services firm fined €21.5 million
The Central Bank has fined crypto-services provider Coinbase Europe almost €21.5 million for breaches of its obligations linked to anti-money-laundering (AML) and combatting the financing of terrorism (CFT).
Coinbase Europe, part of the Coinbase Group, provides crypto-asset and wallet services to customers across the world to facilitate their use of the Coinbase Group’s trading platform to buy and sell crypto assets.
The Central Bank says that the firm has been fined due to faults in the configuration of its transaction-monitoring system, which resulted in more than 30 million transactions, worth more than €176 billion, not being properly monitored over a 12-month period.
This is the Central Bank’s first enforcement notice in the crypto sector.
Suspicious transactions
Coinbase Europe is required to monitor customer transactions and file Suspicious Transaction Reports (STRs) with the national Financial Intelligence Unit (FIU) and Revenue as soon as possible, where it suspects that a transaction is facilitating money-laundering or terrorist-financing.
The regulator says that it took Coinbase Europe almost three years to fully complete the monitoring of the affected transactions, leading to reporting of 2,708 STRs for further analysis and potential investigation.
According to the Central Bank, these STRs contained suspicions associated with serious criminal activities – including drug-trafficking, cyber-attacks, and child sexual exploitation.
The regulator describes the monitoring of transactions in real time and the filing of STRs without delay as “a cornerstone” of the effectiveness and efficiency of the AML/CFT regulatory regime.
Discount
Coinbase Europe has accepted that it breached its transaction-monitoring obligations under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010.
The announcement follows a settlement reached between the Central Bank and Coinbase Europe on 5 November.
The regulator had initially determined a fine of almost €30.7 million, but this was reduced by 30% under a settlement-discount scheme. The sanctions are subject to confirmation by the High Court.
Crypto’s ‘particular features’
Colm Kincaid (deputy governor, consumer and investor protection), said that law-enforcement agencies relied on regulated financial institutions to have systems in place to monitor transactions and report suspicions.
“The failure of such a system within any financial institution creates an opportunity for criminals to evade detection – and criminals will take that opportunity,” he stated.
Kincaid added that crypto had particular technological features that made it especially attractive to criminals looking to move their funds.
“This is why it is especially important that firms engaged in crypto services have robust controls in place to identify and report suspicious transactions,” he concluded.