Binance’s regulatory woes continue to worsen as the world’s largest cryptocurrency exchange by trading volume was fined CA$6 million ($4.4 million) by the Canada’s financial regulator, FINTRAC.
The sanction was imposed due to Binance’s alleged failure to comply with protection against money launderingspecifically related to registering as a foreign money services business and reporting virtual currency transactions.
Binance Compliance Issues Continue
According to at FINTRAC, Binance committed two administrative violations. First, it is claimed that the exchange failed to register with FINTRAC as a foreign money services business.
Second, Binance failed to report large virtual currency transactions of $10,000 or more, along with the required information, as required by regulation. In response to these violations, financial sanctions were imposed.
Sarah Paquet, Director and CEO of FINTRAC, highlighted the agency’s commitment to helping businesses understand and comply with their obligations. Paquet also stated that appropriate measures would be taken if necessary to ensure compliance within the industry. Paquet’s statement reads:
Canada’s anti-money laundering and anti-terrorist financing regime is in place to protect the safety of Canadians and the security of the Canadian economy. FINTRAC will continue to work with businesses to help them understand and comply with their obligations under the Act. We will also firmly ensure that businesses continue to do their part and we will take appropriate action where necessary.
Regulatory violations
According to the regulator, Binance had multiple opportunities to register as a foreign money services business with FINTRAC. However, the exchange reportedly failed to complete the registration within the stipulated time frame.
Notably, until September 25, 2023, the date Binance ceased operations in Canada, the company was required to register with FINTRAC. During this period, FINTRAC claims that Binance violated its registration requirements.
Using blockchain analysis, FINTRAC discovered that Binance failed to report more than 5,902 separate instances of receiving virtual currency amounts totaling $10,000 or more in a single transaction.
Such omissions contravene the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations.
It is worth noting that despite Binance’s growing regulatory challenges, the exchange has expressed its commitment to increasing compliance by appointing a new board of directorsled by the recently appointed CEO, Richard Teng. Teng replaced former CEO Changpeng Zhao, who has since been sentenced to four months in prison.
Additionally, in response to increasing regulatory requirements, the exchange intends to establish a corporate headquarters. This decision aims to respond to the request of regulators for a more robust physical presence and organizational structure.
Amid these developments, Binance’s native token BNB saw a significant rise, reaching $598, driven by a 1.4% price increase over the past 24 hours.
Featured image from Shutterstock, chart from TradingView.com
