• 22 June, 2024
News

DNB Imposes a €3,325,000 Fine on Coinbase Europe

De Nederlandsche Bank (DNB) imposed a €3,325,000 administrative fine on Coinbase Europe on January 18, 2023. Citing non-compliance of the law by Coinbase Europe Limited, DNB alleges the exchange offered crypto services in the Netherlands without a proper registration with the DNB.

Breaking the news, DNB tweeted:

The Netherlands’ law requires companies wanting to offer cryptocurrency services in the Netherlands to first register with DNB. The specific Act dealing with the requirement is the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft).

The Wwft non-compliance on the part of Coinbase Europe attracts a category 3 fine, with the base fine amount being €2 million. In that, at least €0 and at the most €4 million of administrative fines are imposed.

As per its General Fine Calculation Policy, the DNB calculated the amount and imposed the administrative fine. The base amount being a bit high is warranted considering the “severity and degree of culpability of the non-compliance,” DNB states.

DNB clarifies that Coinbase has had a competitive advantage, and it also hasn’t paid supervisory fees to DNB. Any other costs are also not incurred by DNB pertaining to DNB’s regular supervision initiatives. The imposed fine amount is high since the non-compliance extended over a long period of time (from 15 November 2020 to 24 August 2022).

While the DNB considers the non-compliance severe, it still decreased the fine by 5% citing that

Coinbase had always intended to obtain registration with DNB.

The registration in question was obtained by Coinbase on 22 September 2022.  The registration requirement for crypto service providers in the Netherlands came into effect on 21 May 2020 due to a rise in the crypto services-linked money laundering and terrorist financing events.

The registration mandate facilitates DNB to maintain an appropriate risk monitoring framework to curb illicit financial flows. The objective of the Wwft is to stop money laundering of criminal funds and terrorist financing.

Contravention by Coinbase of the Wwft objectives occurred via the offering of crypto services in the Netherlands without a DNB registration.

This rendered Coinbase unable to report unusual transactions to the Financial Intelligence Unit-Netherlands during the period of non-compliance and until 22 September 2022.

So, a huge volume of unusual transactions might have proceeded without getting noticed by the investigative authorities. Coinbase can place its objections to the imposed DNB fine until March 2, 2023.

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