Financial Crime World

Dutch Central Bank Imposes Million-Dollar Penalty on Crypto.com for Compliance Lapses: What We Know

Crypto.Com Fined €2,850,000 by Dutch Central Bank

The financial regulatory landscape in the Netherlands took a significant turn on March 13, 2024, as De Nederlandsche Bank (DNB) imposed a fine of €2,850,000 on Foris DAX MT Limited, the company behind the popular cryptocurrency exchange crypto.com, for non-compliance with registration requirements.

Reasons Behind the Hefty Penalty

The Dutch Central Bank’s penalty followed crypto.com’s failure to register as a crypto service provider in the Netherlands, a requirement that became law since May 2020. DNB’s primary concern focused on:

  • Money laundering and terrorist financing risks within the platform
  • Loss of supervisory fees, compliance costs, and other related expenses for the regulator

The prolonged duration of non-compliance contributed to the severe nature of the penalty. Regulators also expressed concern over numerous unusual transactions that could have gone unnoticed during this period.

Three Key Takeaways for Compliance Teams

When expanding into new markets, understanding the jurisdiction’s Financial Intelligence Unit (FIU) and their Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations is crucial. crypto.com’s case highlights some essential learnings:

  1. Understanding Regulatory Obligations in New Markets: Companies need to familiarize themselves with the new market’s regulatory landscape to effectively monitor suspicious financial activities. The lack of registration with the Dutch FIU in crypto.com’s case prohibited effective monitoring.

  2. Timely Suspicious Activity Reporting (SARs): Timely reporting of suspicious transactions or incidents to regulatory authorities is crucial. Neglecting this responsibility can lead to significant financial consequences and reputational damage.

  3. Regulatory Pressure on Crypto Firms: Crypto companies worldwide are experiencing increasing regulatory scrutiny, and the consequences of non-compliance can be severe. Therefore, proactively addressing regulatory expectations is essential for firms operating in the cryptocurrency sector.

In conclusion, the €2,850,000 fine imposed on crypto.com serves as a reminder of the importance of understanding new market regulations, timely reporting of suspicious transactions, and proactively addressing regulatory expectations in the cryptocurrency sector.