AUSTRAC cracks down on Binance over money laundering risks
The Australian Transaction Reports and Analysis Centre (AUSTRAC) directed Binance Australia to appoint an external auditor after "serious concerns" were identified from its independent review.
The concerns are in relation to the crypto exchange's anti-money laundering and counter terrorism financing (AML/CTF) controls, prompted by several issues including Binance's latest independent review which AUSTRAC said was limited in scope relative to its size, business offerings and risks.
AUSTRAC has also flagged concerns with high staff turnover at the platform and a lack of local resourcing and senior management oversight, raising questions about the adequacy of its AML/CTF governance, AUSTRAC said.
Investbybit, Binance Global's Australian arm, is an AUSTRAC-registered digital currency exchange provider, and by transaction volume it is the world's "largest" centralised crypto exchange.
Established in 2017, it holds regulatory approvals or permissions in around 20 jurisdictions.
Considering this, AUSTRAC chief executive Brendan Thomas said he expects tighter controls from major global operators, particularly in high-risk sectors involved in large transaction volumes.
"This is a global company operating across borders in a high-risk environment. We expect robust customer identification, due diligence and effective transaction monitoring," Thomas said.
"I remind all digital currency exchanges to remain alert to transactions that indicate suspicious behaviour, including money laundering via scams and cybercrime and terrorism financing - the potential for these activities is much higher for global exchanges.
"Capacity and risk controls need to correspond to the size of a business and its market presence, particularly as it scales.
"All digital currency operators need to ensure they are complying with Australian law and limiting their exposure to crime."
He added that AUSTRAC's National Risk Assessment 2024 highlighted the increasing vulnerability of digital currencies to criminal abuse and the action against Binance remains appropriate under the regulation.
"AUSTRAC is committed to working with industry to ensure strong safeguards are in place to make it harder for criminals to move and conceal illicit funds using digital currencies," Thomas added.
"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 AML/CTF obligations in Australia.
"Understanding specific risks of criminality in the Australian context is crucial to ensure they're meeting their reporting obligations here."
Binance did not respond to Financial Standard's request for comment before the deadline provided.
Binance Australia has 28 days to nominate external auditors for AUSTRAC's consideration and selection.
Binance appointed Matt Poblocki as general manager in Australia and New Zealand just one month ago.
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