Regulators Say Binance Must Tighten Money Laundering, Terrorism Rules

Beleaguered crypto company Binance must tighten up its compliance controls covering anti-money laundering and counter-terrorism and add an independent auditor if it wants to keep doing business in Australia, regulators said this week.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is mandating the crypto giant put outside auditors in place within 28 days of its decision. The watchdog said that the new rules are intended to address “serious concerns” it has about its oversight of illegal activity, which AUSTRAC says is “limited in scope relative to its size, business offerings, and risks.”

The regulator said Binance’s most recent internal review found a lack of oversight by senior management within Binance Australia, as well as a lot of employee churn that has resulted in high staff turnover, inadequate local resources, and the need for an outside monitor.

As part of the decision, AUSTRAC will be the one to pick which independent auditor to install at Binance, though the company can provide the list of potential names.

Binance is familiar with regulatory actions

It’s not the first time that Binance has tangled with regulators. Founder Changpeng Zhao pleaded guilty and was fined $4.3 billion 2023 by the U.S. Department of Justice on charges that included anti-money laundering, unlicensed money transmitting, and sanctions violations.

The authorities said at the time that Binance had created a corporate culture that put profit above consumer protections, which it highlighted in internal communications found during a probe of the company.

“As one compliance employee wrote, “we need a banner ‘is washing drug money too hard these days – come to binance we got cake for you,’” the DOJ said in its statement about the settlement.

Binance faces a tough road in Australia

The crypto exchange also faces an increasingly restrictive regulatory landscape in Australia, which recently cracked down on Binance Australia Derivatives in a 2024 lawsuit.

That suit was brought by the Australian Securities and Investments Commission (ASIC) and resulted in Binance losing its derivatives license in the country because of its risk management shortcomings and limited compliance (ASIC).

“Big global operators may appear well resourced and positioned to meet complex regulatory requirements, but if they don’t understand local money laundering and terrorism financing risks, they are failing [to meet their obligations to consumers],” Brendan Thomas, chief executive officer of Austrac, said in a statement.

Binance also had to shut down its Australian dollar trading services earlier this year because its payment provider, Zepto, ended their partnership. That followed an earlier clash with Cuscal, a service provider who had helped it provide banking services, cut off access to its platform.

“Understanding specific risks of criminality in the Australian context is crucial to ensure they’re meeting their reporting obligations here,” Thomas said.

What does Binance say?

“We have engaged openly and transparently with Austrac over the past several months and continue to value their guidance, expertise, and oversight,” Matt Poblocki, general manager of Binance Australia and New Zealand, said in a statement. “We remain committed to maintaining best-in-class compliance standards and will continuously enhance our capabilities.”