This week, Dutch regulators announced that they had slapped Binance, the world's largest exchange by trading volume, with a hefty 3.3 million-euro penalty for failing to get approvals to operate the exchange legally in the Netherlands.
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In April of this year, the central bank of the Netherlands DNB conducted an investigation into the company's lack of registration. According to the country's Money Laundering and Terrorist Financing Prevention Act, companies are required to register with the DNB, but in May 2020, the country made it mandatory to register until December 2021, when the country ended its investigation.
The bank said that these violations are considered to be very serious by the DNB.
The fine was objected to by the exchange last month.
The fine was imposed because Binance offered services in the Netherlands without a legally required registration with DNB. The bank said that it had reduced its fine by 5% due to the fact that the company has been relatively transparent about its business operations and has a registration application in place with the Dutch regulators.
The bank pointed out that Binance has a competitive advantage because it has not paid any taxes to DNB and has not had to incur other costs in connection with ongoing supervision by DNB because of the fact that it has $13.7 billion in global daily trading volume.
The lack of registration meant that the company did not submit suspicious or unusual transactions to the Dutch government, as required by law. The regulator said that it was at risk of overlooking critical financial transactions related to money-laundering, terror financing, or other suspicious activity. In August 2021, DNB had warned the public that Binance was not licensed to operate in the Netherlands.
Without the registration obligation in place, it is less easy to monitor if the risk of criminal money flows is sufficiently counteracted, the regulator said.