Dutch regulators have 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. The country's Money Laundering and Terrorist Financing Prevention Act makes it mandatory for companies to register with the DNB, but in May 2020 it was made mandatory to register until December 2021 when the country ended its investigation.
The bank said that these violations were very serious and that DNB considers these violations to be very serious.
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 it had reduced its fine by 5%, because the company has been relatively transparent about its business operations, and is currently undergoing a registration application with the Dutch regulators.
The bank pointed out that Binance has enjoyed a competitive advantage because it has not had to incur other costs in connection with ongoing supervision by DNB, as it has $13.7 billion in global daily trading volume, but the regulators said that Binance was able to operate tax-free, due to its unwillingness to subject itself to the country's rules.
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 a registration obligation in place, it is less easy to monitor if the risk of criminal money flows is sufficiently counteracted, the regulators said.