Binance Kept Weak Money-laundering Checks Even as it Promised Tougher Compliance, Documents Show 33
In public, Binance -- by far the world's largest cryptocurrency exchange -- said it welcomes government oversight. At the same time, the firm was withholding information from regulators, maintaining weak checks on customers and acting against its own compliance department's recommendations, a Reuters investigation has found. From the report: The reporting shows Binance has operated outside rules that govern traditional financial firms and many crypto rivals. An opaque corporate structure has enabled Binance to offer products that many national regulators don't allow locally registered firms to sell. Binance has repeatedly declined to specify in which jurisdiction its main online exchange is based, complicating regulators' efforts to oversee its activities. And it has minimised costly client background checks. On at least four occasions, Binance declined to provide detailed answers about its operations when asked by financial authorities and business partners, according to regulatory filings and people with direct knowledge.
In encrypted Telegram messages seen by Reuters, Binance staff, including Chief Compliance Officer Samuel Lim and former Global Money Laundering Reporting Officer Karen Leong, raised worries about weak "know-your-customer" checks aimed at preventing money laundering. Three former senior Binance employees told Reuters they voiced such concerns to Zhao himself but he ignored them. Binance acted against its own compliance department's assessment by continuing to recruit customers in seven countries, including Russia and Ukraine, judged to be of "extreme" money-laundering risk in an internal report circulated in early 2020 that was seen by Reuters. Last year, Binance watered down compliance rules arranged with a German business partner, causing disquiet among some Binance staff.
In encrypted Telegram messages seen by Reuters, Binance staff, including Chief Compliance Officer Samuel Lim and former Global Money Laundering Reporting Officer Karen Leong, raised worries about weak "know-your-customer" checks aimed at preventing money laundering. Three former senior Binance employees told Reuters they voiced such concerns to Zhao himself but he ignored them. Binance acted against its own compliance department's assessment by continuing to recruit customers in seven countries, including Russia and Ukraine, judged to be of "extreme" money-laundering risk in an internal report circulated in early 2020 that was seen by Reuters. Last year, Binance watered down compliance rules arranged with a German business partner, causing disquiet among some Binance staff.
It's a feature (Score:5, Funny)
Low compliance towards regulatory bodies seems like a feature of a cryptocurrency exchange.
Re: (Score:2)
Nobody wants it
The vast majority of people do want money-laundering checks.
And that is why you posted anonymously.
Re: (Score:2)
I suppose it depends on how do you phrase the question.
"Do you want complicated checks, having to provide multiple forms of ids, proof of address etc to open even a simple account?"
versus
"Do you want terrorists and criminals to be easily move their money, without any checks, allowing them to fund bombings and reducing your chances of getting your money back after a fraud/scam?"
Both are exagerrations, but I suppose people would answer 'no' to both of them.
It is! (Score:2)
Low compliance towards regulatory bodies seems like a feature of a cryptocurrency exchange.
Considering cryptocurrency is widely used by criminals, it absolutely is a feature.
Re: (Score:2)
Re: (Score:2)
Criminals have poor risk assessment skills... which is why they are criminals to start with.
Well DUH... (Score:3)
The title makes it sound like they ever intended to do anything about doing actual checks on money laundering.
Of course they didn't. And don't. And won't. It would give issues with 99% of their transfers...
Comparing apples to apples (Score:2, Informative)
For comparison, multiple major banks have been caught knowingly laundering money for drug cartels over the past decade:
https://www.theguardian.com/wo... [theguardian.com]
The more telling part is that nobody went to jail in any of these incidents.
Re: (Score:2)
Basically, the fines they're getting for doing this, don't outweigh the profits they make by ignoring the rules.
And it's not an imprisonable offence, I guess.
Re: (Score:2)
Basically, the fines they're getting for doing this, don't outweigh the profits they make by ignoring the rules.
And it's not an imprisonable offence, I guess.
Technically not true, ~100m was proven to be connected to the drug trade, so they paid 100m, plus 50m fine.
Wachovia cooperated, underwent a one year probation and improved their compliance program, that kept their executives from going to jail. Ultimately the bank failed and the government forced a sale of the bank.
Also, Capital One got hit with a $390m fincen fine, or fine plus forfeiture last year.
They will get caught, and they will be forced to enhance their compliance program, or people will go to jail
Re: Comparing apples to apples (Score:2)
"Technically not true, ~100m was proven to be connected to the drug trade, so they paid 100m, plus 50m fine."
Just the cost of doing business which they factor into their spreadsheets. Without any real threat, say a big bankster spending decades on end potentially being a bad man's girlfriend, they will never change.
Re: (Score:2)
Re: (Score:2)
Re: (Score:2)
They at least got caught (Score:4, Insightful)
Re: (Score:2)
Re: (Score:2)
For comparison, multiple major banks have been caught knowingly laundering money for drug cartels over the past decade:
https://www.theguardian.com/wo... [theguardian.com]
The more telling part is that nobody went to jail in any of these incidents.
Because they all bent over backwards to cooperate with the government, and every one of them upgraded their compliance programs, as Binance will.
AML isn't black and white, it's basically about snitching on your customers. What's important is they will inevitably snitch on their customers, you can count on that.
Re: (Score:2)
Here's the thing:
Banks DO NOT CARE about money laundering. They LOVE criminals who have lots of money and don't complain about fees or require lots of support over a stolen check for $3.50. Criminals are typically very high profit customers.
Banks DO CARE about avoiding fines (or worse) related to anti-money laundering laws and compliance.
Banks pay OODLES of money for AML compliance systems and monitoring, but there's absolutely no motivation to do more than what's required - just added cost.
What Binance i
We don't need regulations. (Score:2)
We don't need regulations, except for the fact that they are so many people working on ways to abuse the system. Where the level of abuse is often at such a high level that it could break the system.
In general companies are not interested in the big picture, they will do to maximize profits for themselves. Monitoring to make sure you are not a conduit for money laundering, is expensive and complex, in short a company really doesn't want to do it. Because they get the business right now, and it is making th
Re: (Score:2)
In the same manner as an alcoholic needs a bar.
Re: (Score:2)
Re: (Score:3)
There is a sucker born every minute - P. T. Barnum
Re: (Score:2)
We don't need regulations, except for the fact that they are so many people working on ways to abuse the system.
Humans are by nature corrupt and self serving, and that's just how it is.
Re: We don't need regulations. (Score:2)
Re: (Score:2)
withholding info = privacy (Score:2)
Pretending Crypto is real (Score:2)
Of government oversight (Score:1)