Binance repeatedly hid information from regulators, neglected procedures KYC and acted contrary to the recommendations of its own compliance department. This is stated in a large-scale investigation. Reuters.
The interlocutors of the agency said that Binance abandoned the idea of opening a branch in Malta and obtaining a license from the local financial regulator when it learned about the strict protocols. AML and disclosure requirements.
In 2019, the exchange privately notified MFSAthat she abandoned her plan, but continued to claim that her activities were “governed by the laws of Malta”. In 2020, the Authority reported that Binance was not licensed to operate in the jurisdiction. Soon the information was confirmed by the head of the company, Changpeng Zhao.
The agency noted that Binance refused to provide detailed reports on its activities “at least four times” when this information was requested by regulators or partners. In particular, we are talking about the corporate structure and finances of the company.
In response to an inquiry from the Commission, Samuel Lim, director of compliance at Binance, stated that the company does not provide “investment services” and is governed by Swiss law. In a conversation with Reuters, a representative of the Swiss financial regulator stressed that the local division of the exchange “does not have permission.”
The journalists said that the documents that fell into their hands show the concerns that Binance employees, including Lim, have repeatedly expressed about weak KYC checks. Several Reuters interlocutors said they reported this to Zhao.
However, the head of the exchange allegedly wanted “no KYC at all”, insisting that users should be able to “trade within ten minutes of registering”.
Reuters sources noted that Lim lacked the competence to manage the compliance department of such a large-scale structure. One of the former employees of the company stressed that top managers were “afraid” of Zhao and gave in to his requests.
In at least three countries, including Russia and Ukraine, Binance acted contrary to its own risk scoring. The last two were assigned an “extreme” level. This rating means that the company should not serve clients from these jurisdictions.
Reuters, citing available documents, claims that these estimates were “manually adjusted” – countries were assigned a “high” level of risk.
The agency also said that Binance refused to cooperate with German law enforcement in money laundering cases. The police believed that fraudsters and terrorists carried out illegal activities through the company’s platform.
Cryplogger requested a comment from Binance representatives, but did not receive a prompt response.
Changpeng Zhao called the agency’s investigation FUD. According to him, journalists are trying to denigrate the company by “talking with people who were fired from Binance and partners who did not have a relationship with the exchange.”
FUD. Journalists talking to people who were let go from Binance and partners that didn’t work out trying to smear us. We are focused on anti-money laundering, transparent and welcome regulation. Action speaks louder than words. Thank you for your unwavering support! 🙏
— CZ 🔶 Binance (@cz_binance) January 21, 2022
Throughout 2021, regulators in a number of countries, including the Netherlands, Italy, the UK, Poland, Japan, Thailand, Hong Kong, Singapore, and South Africa, issued warnings regarding Binance or took action against the exchange.
Recall that in December, the Ontario Securities Commission announced that Binance did not have a license.
