The Dutch central bank, the De Nederlandsche Bank (DNB), has ordered all crypto companies operating in the country to register with them by May 18. This directive was issued in line with the country’s updated anti-money laundering laws. The laws were passed by the country parliament in March 2020. These laws were passed in compliance with the recommendations of the Financial Action Task Force.
Amendments to Dutch Law
Lawmakers in the Netherlands amended current AMLD4 laws to enforce the new compliance framework. However, it is not clear why lawmakers in the Netherlands are still working with AMLD4 laws while there are new AMLD5 directives.
The amended laws state that all crypto companies have to register with the central bank. Failure to do that will lead to cease and desist orders being issued. Additionally, they will face fines and other enforcement actions. These laws apply to exchanges that offer crypto-to-fiat services. These laws will not affect those companies offering crypto-to-crypto services and they do not have to register with the central bank.
Harsh Laws in Europe – AMLD5
Crypto firms operating in the EU have been critical of the laws being passed within the space. Most of these companies believe that the passing of the AMLD5 laws by the Financial Action Task Force will impede their ability to operate within the region.
The AMLD5 ( the 5th anti-money laundering directive ) is supposed to be a much stricter legal framework to mitigate the risks involving criminals using cryptocurrencies for illegitimate activities. According to a report by the European Parliament, many cryptocurrency operations do not follow AMLD5. The parliament believes this creates many “blind spots” when it comes to money laundering, terrorist financing, and tax evasion. In addition, the report outlines the fact that Blockchain itself doesn’t impose these risks, but various cryptocurrency service providers ( miners, exchanges, wallet providers, ect.. ) do. Normally speaking, blockchain and cryptocurrency go hand in hand. The parliament outlines the fact that they don’t want to discourage future innovation, they just want to insure that investors in the cryptocurrency space are abiding by stricter rulesets.
Some of the companies have already left the region. For instance, Deribit, a crypto options, and trading exchange, announced that it was leaving the EU in January. The company announced that it would register in Panama in February.
Their decision was made after it emerged that the Netherlands was planning to adopt stricter AML laws to regulate the crypto sector. Additionally, they added that under the new laws, they would have been forced to hand over a huge amount of information about their customers, which they were not willing to do. In their announcement, they stated that they believed the crypto market should be available to the masses freely and the new laws would create a major barrier for their customers.
However, they also announced they would implement tougher KYC rules for those using their platform via Chainlysis and Jumio. According to the new rules, customers have a cap of 1 BTC or 50 ETH unless they provide the necessary documents.
The Netherlands had issued directives for companies in the crypto sector to register with the central bank in September. However, there was no proper enforcement at the time.
The Dutch and a Digital Euro
While the central bank is pushing crypto companies to register with the central bank, it is also seeking to be a leader in Europe’s push for a digital Euro. In a report that was published in April, the central bank said that if a decision was made to experiment with a CBDC in the EU, the country was ready to play a leading role.
In the report, the bank also noted that there were benefits of using smart contracts in the development of a CBDC. Most efforts towards the development of a digital currency in the EU appear to have been ramped up after China revealed that it would soon launch a digital currency.
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