Regulations for the use of cryptocurrencies are becoming stricter in the Netherlands. Recently, its Dutch Central Bank (DNB) delivered new legal obligations for the national cryptocurrency companies, which go beyond the common Know Your Customer (KYC) process.

Apparently, now it won’t be enough to provide documents for identification and/or own an old and verified account in some cryptocurrency exchange. The company involved in the transaction should check if “their clients and any ultimate beneficiary owners (UBOs) are on a Dutch or European sanctions list” and immediately report it to the central institution.

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For the users, this regulation implies additional checks like a declaration of the purpose for their transaction, kind of wallet, and screenshots or signing messages. In case the customer is on the sanctions list, the transaction and account should be frozen by the exchange.

According to the announcement:

“In the event of an actual hit in a sanctions list, the institution must immediately notify DNB, as well as freeze any assets, block the transaction, or do both. Accordingly, assets may not be released to any other, non-sanctioned, party. FIU-NL (Financial Intelligent Unit) must also be notified in specific cases”.

If the company fails to report the hit, its action would be punishable under the Economic Offences Act. Such regulation describes fines up to 82.000 EUR (fifth category) and even six years in prison, depending on the financial offense. Besides, additional sanctions can be the total closure of the company, seizure of the funds, and withdrawal of government benefits.

Against the measure

The cryptocurrency companies and users in the Netherlands aren’t quite happy about the announcement. Arguments against it include that not even the national banks are obliged to do this, and the regulation was kind of sudden and it doesn’t have a solid legal basis.

Image by Niek Verlaan from Pixabay

The Bitcoin entrepreneur and privacy advocate Matt Odell stated that this can be the “natural evolution of KYC/AML regs”, and an “obvious precursor to proper self-custody bans” worldwide.

Sadly, the cryptocurrency firms which aim to legally operate in the territory should be registered with the authorities before 21 November 2020. And, despite its novelty, those additional measures beyond KYC are a requirement for the registration.  So, the firms should adapt or close.

Meanwhile, some industry actors are raising their voices against this particular decision, or at least trying to buy more time to adapt their systems and customers to it.


Featured image by Michael de Groot from Pixabay

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Literature professional in the crypto-world since 2016. Writer, researcher, and bitcoiner. Working for a better world, with more decentralization and coffee.

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