• Last year, De Nederlandsche Bank (DNB) issued a public warning to Binance for failing to operate under the Money Laundering and Terrorist Financing (Prevention) Act (Wwft).

• According to DNB, the decision to get crypto service providers to register with them is very important in their fight against illicit transactions.

The Dutch Central Bank has fined Binance Holdings LTD for operating crypto services without the necessary registrations. The registration application was imposed on crypto companies on May 21, 2020, due to the high risk of money laundering and terrorist financing posed by the asset class. 

On, August 18, 2021, De Nederlandsche Bank (DNB) issued a public warning to Binance for failing to operate under the Money Laundering and Terrorist Financing (Prevention) Act (Wwft). This violation subjects them to a fine from the third category according to the report. Since it is not registered, Binance has not been able to report unusual transactions to the FIU-NL. This puts such transactions out of sight of the investigating body.

The crypto exchange has, therefore, been fined EUR 3,325,000 ($3.37 million). It is important to note that the basic amount of administrative fine is EUR 2,000,000 ($2 million), and the maximum is EUR 4,000,000 ($4 million). To ensure that this decision serves as a warning to other exchanges, the basic amount was increased. Also, the DNB’s General fine setting policy was considered. 

Binance saw the fine moderated by 5%

The increase in the fine amount also put into consideration the reputation of the exchange. Binance is one of the largest crypto service providers worldwide, with a daily trading volume of over $13.7 billion. In addition, it has a huge user base in the Netherlands. Another reason for imposing a heavy fine on the exchange is that Binance has enjoyed a competitive advantage since no levies have been paid to the regulatory body. It has also not incurred any additional cost in its operation in the country.

The period for violation is said to be from the day the registration obligation was introduced (May 21, 2020) to the day the investigation was launched (December 2021). Regardless, the fine has been moderated by 5 percent since Binance has been very transparent throughout the process coupled with the recent submission of its registration application.

According to DNB, the decision to get crypto service providers to register with them is very important in their fight against illicit transactions.

The purpose of the Wwft is to combat money laundering of proceeds from crime and the financing of terrorism. Tackling money laundering is of great importance for the effective fight against all kinds of serious crimes. After all, obscuring the criminal origin of the proceeds of crime enables perpetrators of these crimes to stay out of the reach of investigative authorities and to enjoy the accumulated assets undisturbed.

Last year, Britain’s Financial Conduct Authority stated that Binance is not permitted to undertake any regulated activity in the country. Japan’s Financial Services Agency also warned that the exchange was operating in the country without permission.