Coinbase Fined For Providing Unregistered Crypto Services

Registration

Companies wishing to provide crypto services in the Netherlands are required to register with DNB under the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft).

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

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

Fine

Coinbase’s non-compliance with the Wwft is punishable by a category 3 fine. The base amount in this fine category is €2 million, with a minimum amount of €0 and a maximum amount of €4 million. DNB applied its General fine calculation policy (in Dutch) to set the amount of the administrative fine. The base amount has been increased due to the severity and degree of culpability of the non-compliance.

In increasing the fine, DNB 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. In addition, 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. A further important reason for the increased fine is that the non-compliance persisted over a prolonged period: from 15 November 2020 until at least 24 August 2022 (the end date of DNB’s examination). This is why DNB considers the non-compliance to be very severe.

However, DNB did reduce the fine by 5% because Coinbase had always intended to obtain registration with DNB. Coinbase obtained its registration on 22 September 2022.

Registration requirement

The registration requirement for crypto service providers was introduced on 21 May 2020 because of 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 DNB to monitor the risk of illicit financial flows more effectively.

The Wwft aims to counter money laundering of criminal proceeds and terrorist financing. Action against money laundering is of high importance to ensure effective countering of different forms of serious crime. Concealing the origin of criminal proceeds enables perpetrators to keep out of the reach of the investigative authorities and enjoy their ill-gotten gains undisturbed.

Coinbase contravened the objectives of the Wwft 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.

Objection

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

Source: DNB