Binance Deploys New AML Solution Amid Regulatory Pressure

Binance has deployed a new AML compliance solution in the face of a ban in the UK and warnings from Japanese and Thai regulators.

Binance has announced that it has deployed a commercial solution called CipherTrace Traveler to achieve compliance with FinCEN (Financial Crimes Enforcement Network) and FATF (Financial Action Task Force’s) travel rule regulations.

This makes Binance the first crypto exchange to deploy Traveler, which was released in March. The solution automatically scans addresses associated with incoming cryptocurrency transactions, verifying the originating VASP and recipient VASP to each other.

“We are continuing to invest in our compliance programme and technology to further strengthen our standards,” said Binance Chief Compliance Officer Samuel Lim. Traveler will support Binance’s compliance commitment to detecting bad actors and preventing their use of its platform, the company said.

Binance’s announcement of Traveler’s deployment comes amid regulatory pressure from the FCA (Financial Conduct Authority), which has issued a consumer warning saying Binance Markets Limited, the UK unit of Binance, is not permitted to undertake any regulated activity in the UK without the prior written consent of the regulator.

Binance Markets Limited was established a year ago as part of a plan to launch a UK-focused exchange, Binance UK, which would have been ring fenced from the wider global operation.

Binance Markets had authorisation to provide UK consumers with investment services in traditional currencies, obtained through the purchase of a financial company that was already registered. The transaction was approved by the FCA last June.

However, Binance Markets is not approved under the FCA’s cryptocurrency registration regime, which is required for UK groups offering digital asset services. The FCA noted in its warning that no other entity in the Binance Group holds authorisation to conduct regulated activities in the UK.

The FCA instructed Binance Markets to remove any advertising and financial promotions it has live, and told the firm to secure and preserve all records relating to UK consumers, so they can be provided to the FCA promptly on request.

The warning came a day after a warning from Japan’s FSA (Financial Services Agency) that Binance was not unauthorised to conduct trading in cryptocurrencies with Japanese citizens. Binance said it does not operate an exchange in Japan and does not actively solicit Japanese users.

In April, Thailand’s SEC (Securities and Exchange Commission) also issued a warning against Binance, saying the crypto exchange is not licensed to operate a digital asset business in the country. The company does not have operations in Thailand. A criminal complaint has now been filed alleging that Binance is soliciting the Thai public and investors to use its services.

On Thursday (1 July), Bloomberg reported that MAS (Monetary Authority of Singapore) said it would follow up as required with Binance’s local unit, aware of the regulatory scrutiny the company is facing in other jurisdictions. In Singapore, Binance Asia Services Pte is operating under a grace period while its application for a licence under the Payment Services Act is being reviewed.

Separately, the Cayman Islands Monetary Authority said it has launched a probe into whether Binance and its group of companies have activities operating in or from within the Cayman Islands which may fall under regulatory oversight.

Binance is the world’s biggest cryptocurrency exchange by reported turnover. It recorded crypto trading volumes equivalent to USD 1.5 trillion in May, according to data from TheBlockCrypto.

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