Coinbase Hit with €21.5 Million Fine for AML Failures: Irish Watchdog Cites Ineffective Systems

Coinbase Europe has been fined €21.5 million ($25 million) by the Central Bank of Ireland due to ineffective anti-money laundering (AML) systems that failed to monitor approximately 30 million transactions. The company must exit Ireland and relocate its operations to Luxembourg as a result.

Key Takeaways

Coinbase Europe fined €21.5 million for AML compliance failures.
Approximately 30 million unmonitored transactions valued at €173 billion occurred between 2021 and 2022.
The company lacked adequate transaction monitoring systems during its Virtual Asset Service Provider (VASP) registration.
Coinbase plans to exit Ireland and transition to Luxembourg by the end of 2025.

Coinbase Europe fined €21.5m over Ireland AML monitoring failures.

Coinbase's Regulatory Challenges in Ireland

The Central Bank of Ireland has imposed a substantial fine of €21.5 million on Coinbase Europe due to a series of shortcomings in its transaction monitoring systems. Between 2021 and 2022, the company failed to monitor around 30 million transactions, raising alarms about compliance with anti-money laundering (AML) regulations. This scandal is a significant development as it marks the fourth-largest penalty ever handed out by the Irish financial regulator.

The penalties stem from serious compliance failures as Coinbase Europe’s systems proved inadequate to oversee its operations effectively. According to settlement documents released in November 2025, approximately 31% of Coinbase Europe’s business volume—totaling about €173 billion—was left unmonitored during the identified period. The company's registration as a Virtual Asset Service Provider (VASP) will expire by the end of 2025, necessitating a move to Luxembourg.

Breakdown of Compliance Failures

Regulatory authorities have indicated that the heart of the problem lies in Coinbase Europe’s inability to manage its AML compliance systems adequately. The failures happened while the European subsidiary outsourced its transaction monitoring responsibilities to its U.S. parent company, Coinbase Inc. This arrangement was intended to utilize a transaction monitoring system (TMS) capable of flagging suspicious activities. However, between April 23, 2021, and April 29, 2022, five of the 21 high-risk monitoring scenarios failed due to data configuration errors.

These failures went unnoticed for an extended period, with Coinbase Europe not being informed until February 2023. Senior management only fully grasped the potential significance of the issue in May 2023, following additional details shared by Coinbase Inc.

The Central Bank highlighted that the lengthy rescreening process for the unmonitored transactions took almost three years to complete, undermining the effectiveness of the suspicious transaction reports that were submitted during that timeframe.

Regulatory Scrutiny and Responses

Coinbase Europe's registration as a VASP was finalized in December 2022, at which point the company was unaware of the TMS shortcomings. During discussions with the Central Bank in September 2022, Coinbase assured regulators that plans were in motion to resolve compliance backlogs, which influenced the bank’s decision to grant the VASP registration.

After the Central Bank notified Coinbase Europe of the compliance issues, the organization faced increased regulatory scrutiny and was directed to make substantial improvements to its AML framework and compliance protocols.

The settlement terms revealed that Coinbase admitted to specific violations extending through March 19, 2025, including the failure to monitor an additional 184,790 transactions.

Cryptocurrency Regulation Comments

Interestingly, these enforcement actions coincided with Coinbase's submission of comments to the U.S. Treasury Department regarding cryptocurrency regulations. In those communications, the company urged the Treasury to publish guidance recognizing Know Your Transaction (KYT) screening and blockchain analytics as effective tools for enhancing AML and counter-terrorism financing compliance.

Coinbase emphasized its commitment to compliance innovation, showcasing its use of application programming interfaces (APIs) for real-time monitoring and advanced analytics. The company’s chief legal officer signed these comments, underscoring its seriousness in addressing regulatory challenges.

Transition to Luxembourg

As the situation unfolds, Coinbase Europe has managed to acquire licensing in Luxembourg through a separate regulatory procedure. The company has not yet responded to inquiries regarding the enforcement actions taken by the Central Bank of Ireland, which declined further comment beyond the settlement documentation.

In summary, the penalties levied against Coinbase Europe highlight the critical importance of compliance in the rapidly evolving cryptocurrency landscape, signaling to the industry the need for robust monitoring systems and effective risk management practices.