Binance Made Weak Attempts At Preventing Money Laundering: Report
- The report states that Binance hasn’t been strict enough in combating financial crimes.
- The exchange has not made any official statement regarding Reuter’s claims.
A Reuters report has claimed that the leading crypto exchange, Binance, has failed to deliver on its promises to prevent money laundering practices. The media outlet said Binance didn’t obey financial laws even though many of its competitors did. Additionally, the report highlighted that there are uncertainties over the physical location of the company.
Thus, it is impossible to determine whether the exchange complies with the laws obtainable in such regions. The news firm further said that the exchange’s CEO, Changpeng Zhao, CZ, didn’t take the advice of its compliance team.
The compliance team advised the company to perform due diligence before allowing large-volume transactions. However, CZ disregarded the advice and allowed money laundering practices through the exchange.
Is Binance Playing Dirty?
A June 2022 Reuters report stated that Binance had become the favorite exchange for drug traffickers, hackers, and fraudsters.
However, Matthew price (the exchange’s compliance officer) denied the claims. He said the report used biased metrics because it promoted an agenda against the exchange. Last year, Binance significantly reduced the withdrawal limits for accounts that haven’t completed the Know Your Customer (KYC) process.
Binance reduced the withdrawal limits on such accounts from 2 BTC to 0.06 BTC. The exchange stated that the move aimed to eliminate money laundering on the exchange. Recently, the exchange hired two ex-regulatory officials to enhance its global surveillance team.
Seth Levy and Steven McWhirter were hired in April by the exchange due to their experiences. Levy has a 16-year of experience working with the financial industry regulatory authority, FINRA (FINRA is one of the top financial regulators in the US). Binance hired Levy to head its market surveillance team.
Mcwhirter was an ex-official with the UK’s Financial Conduct Authority (FCA). He joined the company as its director of regulatory policy. Binance hasn’t made any official statement regarding Reuter’s claims. However, a spokesperson for the company said the exchange is a leader investing in future technologies and legislation that will improve the security of the crypto industry.
In another development, Reuters accused Binance of still operating in Iran till last September. The exchange had stated in November 2018 that it would no longer be providing its services to Iranians. Binance announced the ban following a US sanction on the Asian country.
The US Commodity Futures Trading Commission (CFTC) scrutinized Binance’s US subsidiary (BinanceUS) following its launch three years ago. The US regulator was worried that the exchange’s US customers would start trading crypto derivatives.
However, the company might face more scrutiny following a March 2022 executive order. Through the order, US President Joe Biden mandated all regulators to work together to develop a solid framework for regulating the crypto industry.
In an official statement, Levy said one of its primary responsibilities is to ensure that Binance users aren’t exposed to any wicked acts from fraudsters or hackers. Levy will also see to creating and implementing a comprehensive surveillance system for the exchange.