Binance Lands €3.3 Million AML Penalty in the Netherlands

By Koos Couvée

The Dutch central bank has fined Binance, the world’s largest cryptocurrency exchange, €3.3 million for handling cryptocurrency-denominated transactions, maintaining digital wallets and offering other financial services in the country without authorization.

In a 35-page notice, De Nederlandsche Bank, or DNB, said Monday that the Cayman Islands-headquartered exchange, which reached a market cap of more than $100 billion last year, incurred the fine in April for violating a requirement to register for anti-money laundering purposes from May 2020 to December 2021 despite several warnings.

DNB raised the base limit of the penalty—the first of its kind in the Netherlands, and possibly the EU—by an unspecified value to account for Binance’s market share and the fact that the exchange, which remains unregistered, continues to serve a “very large” number of Dutch customers.

“In addition, Binance enjoyed a competitive advantage because it did not pay any levies to DNB and did not incur any other costs related to ongoing supervision by DNB,” the regulator said Monday. “Another important reason for the increased fine is that the violations took place over a long period of time.”

DNB required cryptocurrency exchanges, custodial wallet providers and other companies to register for AML purposes by May 2020 to continue serving clients in the Netherlands pursuant to the EU’s Fifth AML Directive, which came into force four months prior.

Last August, DNB took the rare step of warning in a public notice that Binance was still operating in the Netherlands illegally. The regulator disclosed Monday that the warning came three months after the exchange had been ordered to stop serving Dutch customers.

DNB said Monday that Binance first applied to register with DNB for AML purposes in August 2021, but withdrew the application six months later and submitted a new one which is still under review.

“That Binance later took additional measures, such as changing domain names [and] removing Dutch-language information about filing tax returns in the Netherlands … does not alter the fact that [it] actively targeted the Dutch market at several points without the required registration,” DNB said. “[And] despite these measures, Binance continues to serve Dutch customers.”

Lacking registration precludes the exchange from reporting suspicious transactions to the Dutch financial intelligence unit, according to DNB. “It is possible that this will keep a large number of unusual transactions out of sight of the investigative authorities,” the regulator said.

Around 30 cryptocurrency providers have successfully registered with DNB to date, thus subjecting themselves to tougher scrutiny over their compliance processes and an average fee of €100,000 per year to cover the cost of supervision.

Registration also obliged them to comply with a controversial sanctions-screening rule until May 2021, when a local court questioned the measure’s legality.

Binance probably benefited from a migration of Dutch clients who abandoned local exchanges in response to the manner in which DNB applied the sanctions-screening rule and other regulations, said Patrick van der Meijde, chair of the Dutch Association of Bitcoin Companies.

“Binance has absolutely had a competitive advantage and one might wonder whether non-compliance was part of a business strategy,” van der Meijde said. “There are other parties who are operating in a similar way and at least DNB is sending a signal to them, but I’m not sure what advantage this has for local players at this point.”

DNB said Monday that it had reduced the original €3.5 million fine by 5 percent after Binance submitted an application for AML registration and had been “relatively transparent about its operations throughout the process.”

Contact Koos Couvée at

Topics : Anti-money laundering , Cryptocurrencies
Source: Netherlands
Document Date: July 18, 2022