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De Nederlandsche Bank (DNB) has found that Binance offered crypto-services in the country without registering. Binance has said it is now close to meeting Dutch regulatory requirements.
Since May 2020, crypto companies that offer services in the Netherlands are required to register with the DNB.
Companies that provide crypto-services “pose a high risk of money laundering or terrorist financing” due to the anonymity of crypto transactions, the DNB said in a release.
However, Binance has not sought registration with the DNB until recently, which meant that the crypto exchange could not report suspicious transactions to the relevant authorities.
“As a result, a large number of unusual transactions may remain out of sight of the investigating authorities,” the central bank said.
Binance, whose 2021 revenue was estimated to have reached $20bn, will have to pay €3.3m to the DNB.
According to the regulator, this includes an increase received due to the seriousness of the conduct.
The central bank also took into account the fact that Binance is the largest crypto exchange worldwide, with a daily trading volume of $13.7bn, and that it has a “very large” number of customers in the Netherlands.
In addition, by not registering, Binance could avoid paying fees to DNB and could save other costs relating to ongoing supervision by DNB, therefore gaining a competitive advantage.
The violations took place over a sustained period between May 2020 and December 2021.
However, the DNB applied a 5 percent reduction to the fine because Binance had submitted a registration application and the exchange had been “relatively transparent” about its business operations throughout the process.
“While we do not share the same view on every aspect of the decision, we deeply respect the authority and professionalism of Dutch regulators to enforce regulations as they see fit,” Binance said in an emailed statement.
“With this now behind us, we can continue pursuing a more traditional operating model in the Netherlands.”
The spokesperson added that Binance has already reached a “critical milestone in meeting Dutch regulatory requirements” by applying for registration as a crypto-service provider through a locally established entity, Binance Nederland BV.
“This was a crucial step as Binance continues to mature and expand across Europe as a more traditionally regulated fintech company.”
VIXIO analysts understand Binance has filed an appeal against the decision. Without confirming the fact of the appeal, the spokesperson said they are “looking to put this behind us”.
Binance changes approach
The Dutch authority first warned the crypto exchange in August 2021 that it was not in compliance with local money laundering laws.
The notice came amid a wave of regulatory warnings issued to Binance by a number of authorities worldwide, including from Hong Kong, Japan and the UK.
Since then, the company has changed its approach to authorities, recognising that it has grown too big for regulators to ignore.
It has obtained licences in a number of countries and confirmed plans to establish an official headquarters.
Binance CEO Changpeng Zhao, "CZ", has spoken several times in favour of “good regulation”, which could help the crypto industry grow bigger and faster to achieve mass adoption.
The Dutch case “is the result of Binance’s more proactive engagement strategy with global regulators, which has also spurred recent approvals in strict regulatory environments such as France, Italy, and Spain in the last few months alone", the crypto firm’s spokesperson said.
