Binance Fined $6M for Compliance Failures

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has taken decisive regulatory action against Binance, one of the world’s largest cryptocurrency exchanges, for breaches related to money laundering regulations. According to a recent announcement, Binance faced significant fines for not adhering to Canadian financial laws.

FINTRAC’s findings highlighted two primary infractions by the crypto giant: the failure to register as a foreign money services business within Canada, and the negligence in reporting a virtual currency transaction that exceeded $10,000 in a single operation. As a result, Binance has been penalized with an administrative monetary penalty amounting to $6,002,000, equivalent to about $4.4 million USD, as detailed in a release dated May 9, 2024.

The penalties stem from violations detected during a compliance review in 2023. “Binance Holdings Limited, operating under various names including Binance.com and Binance Global, is classified as a foreign money services business,” FINTRAC stated, emphasizing the systematic nature of these failings. The scrutiny revealed that Binance failed to report over 5,902 transactions, each involving sums of $10,000 or more in virtual currency, from June 1, 2021, to July 19, 2023.

FINTRAC, serving as Canada’s financial intelligence unit, plays a crucial role in combating money laundering and terrorism financing. The organization utilizes advanced blockchain analytics to track and analyze transactions that might be linked to illicit activities within Canada’s financial ecosystem.

This isn’t the first time Binance has faced legal challenges related to financial compliance. In November 2023, the U.S. Department of Justice proposed a hefty $4 billion plea deal with Binance to conclude investigations into allegations of money laundering, fraud, and sanctions violations. This deal also involved Changpeng ‘CZ’ Zhao, Binance’s CEO at the time, who agreed to step down and pay a $50 million fine. Zhao was further sentenced to four months in prison in April 2024 after admitting to violating anti-money laundering regulations.

As regulatory scrutiny intensifies globally, crypto exchanges like Binance must enhance their compliance mechanisms to navigate the complex legal landscapes of international finance. This case underscores the importance of robust regulatory frameworks to ensure the security and integrity of the financial markets.