Coinbase fined for providing unregistered crypto services

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On January 18, 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 registering with DNB, which is not in accordance with the law.

Companies wishing to provide crypto services in the Netherlands are required to register with the DNB under the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act.

DNB imposes an administrative fine on Coinbase Europe Limited for providing crypto services without the legally required registration until September 22, 2022. https://t.co/wEjAez6GDs pic.twitter.com/cDzXxKRqq4

— De Nederlandsche Bank (@DNB_NL) January 26, 2023

Coinbase’s failure to comply with the Wwft is subject to a category 3 fine. The base amount of this category of fine is 2 million, with a minimum amount of 0 and a maximum amount of 4 million. DNB applied its general policy for calculating fines (in Dutch) to set the amount of the administrative fine. The base amount has been increased due to the seriousness and culpability of the non-compliance.

In increasing the fine, DNB took into account that Coinbase is one of the largest crypto service providers in the world. Additionally, Coinbase has a significant number of customers in the Netherlands who use its crypto services. Additionally, Coinbase enjoyed a competitive advantage in that it did not pay any monitoring fees to DNB or incur any other costs related to DNB’s regular monitoring activities. Another important reason for the increased fine is that the non-compliance persisted for an extended period: from November 15, 2020 until at least August 24, 2022 (DNB review end date). This is why DNB considers non-compliance to be very serious.

However, DNB reduced the fine by 5% because Coinbase had always intended to obtain registration from DNB. Coinbase obtained registration on September 22, 2022.

The registration requirement for crypto service providers was introduced on May 21, 2020 due to the high risk of money laundering and terrorist financing associated with crypto services. This is related to the anonymity associated with crypto transactions. The registration requirement enables the DNB to more effectively monitor the risk of illicit financial flows.

The WWFT aims to combat money laundering of the proceeds of crime and the financing of terrorism. The fight against money laundering is of great importance to ensure an effective fight against the various forms of serious crime. Concealing the origin of the proceeds of crime allows perpetrators to stay out of the reach of investigating authorities and enjoy undisturbed their ill-gotten gains.

Coinbase has violated WWFT objectives in the past by providing crypto services in the Netherlands without registering with DNB. This means that Coinbase was unable to report any unusual transactions to the Netherlands Financial Intelligence Unit during the non-compliance period and until September 22, 2022. As a result, a large number of unusual transactions may have gone unnoticed by the investigating authorities during this period. period.

Coinbase has until March 2, 2023 to object to the fine.

Source: DNB

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