A €21.5 million fine imposed by the Central Bank against a crypto services provider breaches of monitoring obligations linked to anti-money laundering and combating the financing of terrorism has been confirmed by the High Court.
High Court president Mr Justice David Barniville on Monday confirmed the sanction, which also includes a reprimand by the Central Bank, on Coinbase Europe Ltd
The company is part of the global Coinbase Group, which operates a significant global trading platform for crypto assets. Coinbase Europe was set up six years ago to provide crypto asset and wallet services to customers in Europe and further afield.
Coinbase Europe now has seven days to pay over the fine after a settlement was negotiated with the Central Bank last November.
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Confirming the sanction, believed to be the first of its kind against the crypto sector, Mr Justice Barniville said it was an extremely large fine along with a reprimand, but this did not mean it was disproportionate.
The judge also noted that the Central Bank sanction was imposed with consent and the application before the court was unopposed. The court also noted that the original monetary penalty imposed by the Central Bank was €30.6 million, but the final figure of €21,464,734 reflected a 30 per cent settlement scheme discount.
In an affidavit to the court, Louise Gallagher of the Central Bank Enforcement Investigations Division said cryptocurrency firms are exposed to significant money laundering and terrorist financing risks due to their technological features, cross border operations and anonymity enhancing capabilities.
Coinbase Europe agreed the undisputed facts.
Last November, after the settlement was reached, the Central Bank said as a virtual asset service provider, Coinbase Europe is required to monitor customer transactions on an ongoing basis. Where Coinbase Europe suspects that a transaction is facilitating money laundering or terrorist financing, it is required to file a Suspicious Transaction Report with the national Financial Intelligence Unit and Revenue Commissioners as soon as possible.
The bank said Coinbase Europe had been fined due to faults in the configuration of their transaction monitoring system, which resulted in more than 30 million transactions not being properly monitored over a twelve month period. The value of these transactions amounted to over €176 billion, and accounted for approximately 31 per cent of all Coinbase Europe transactions conducted in the period when the faults existed.
Further, it said it took Coinbase Europe almost three years to fully complete the monitoring of the impacted transactions.
Coinbase Europe it said accepted that it breached its transaction monitoring obligations under the legislation by failing to fully and properly monitor 30,442,437 transactions as well as failing to adopt internal policies, controls and procedures to prevent and detect the commission of money laundering and terrorist financing; and failing to conduct additional monitoring in respect of 184,790 transactions.
