Dutch central bank slaps cryptocurrency exchange Coinbase with 3.3 mn euros fine

The fine was imposed on January 18.

On its website, the central bank said, “on 18 January 2023, De Nederlandsche Bank (DNB) imposed an administrative fine of €3,325,000 on Coinbase Europe Limited (Coinbase). The fine was imposed because Coinbase provided crypto services in the Netherlands in the past without registration with DNB, which is in non-compliance with the law.”

In the Netherlands, companies that wish to provide crypto services are required to register with DNB under the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act.

The central bank introduced the registration requirement for crypto exchanges and other crypto services providers on May 21, 2020, due to the high risk of money laundering and terrorist financing associated with crypto services. Notably, this is related to the anonymity associated with crypto transactions.

Having a registration requirement mechanism in place, enables DNB to monitor the risk of illicit financial flows more effectively.

According to the central bank, Coinbase’s non-compliance with the guidelines is punishable by a category 3 fine.

In its statement, the central bank explained that the base amount in this fine category is €2 million, with a minimum amount of €0 and a maximum amount of €4 million. It added, “The base amount has been increased due to the severity and degree of culpability of the non-compliance.”

Although while increasing the fine amount, DNB also took into account the fact that Coinbase is one of the largest crypto service providers globally. Moreover, Coinbase has a significant number of customers in the Netherlands that make use of its crypto services.

Additionally, it said, “Coinbase has enjoyed a competitive advantage in that it has not paid any supervisory fees to DNB or incurred other costs in connection with DNB’s regular supervision activities.”

Another reason for increasing the fine amount is the non-compliance persisted over a prolonged period which would be from 15 November 2020 until at least 24 August 2022 which is also the end date of DNB’s examination.

Further, the Dutch central bank revealed that Coinbase contravened the objectives of the guidelines in the past by providing crypto services in the Netherlands without registration with DNB. This meant that Coinbase was unable to report unusual transactions to the Financial Intelligence Unit-Netherlands during the period of non-compliance and until 22 September 2022. As a result, a large number of unusual transactions may have gone unnoticed by the investigative authorities during this period.”

“This is why DNB considers the non-compliance to be very severe,” the central bank said.

Still, DNB reduced the fine by 5% because the crypto exchange had intended to obtain registration with DNB. 

The crypto exchange had obtained its registration on 22 September 2022.

The central bank has given Coinbase until 2 March 2023 to object to the fine.