Binance Fined $4.4 Million by Canadian Regulator for AML Non-Compliance

• Binance, the world’s largest cryptocurrency exchange, has been fined $4.4 million by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) for non-compliance with anti-money laundering (AML) regulations.
• The regulatory body cited two specific breaches: Binance’s failure to register as a foreign money services business and its failure to report a single virtual currency transaction exceeding $10,000.
• This is not the first time Binance has faced regulatory scrutiny in Canada, prompting the exchange to cease its operations in the country.

Binance, a leading cryptocurrency exchange, has been fined $4.4 million by the Canadian regulatory body for failing to comply with AML regulations. The fine was imposed due to Binance’s failure to register as a foreign money services business and report transactions exceeding $10,000.

FINTRAC’s Compliance Activity Findings

The hefty fine was a result of findings from a compliance activity conducted by FINTRAC in 2023. The regulator found that Binance failed to report the receipt of an amount in virtual currency of $10,000 or more on 5,902 separate occasions between June 1, 2021, and July 19, 2023. FINTRAC, part of Canada’s financial intelligence unit, is tasked with detecting and preventing money laundering, terrorism financing, and other illicit activities within the Canadian financial ecosystem.

Binance’s Regulatory Challenges in Canada

Binance has faced multiple regulatory challenges in Canada. The country’s recent moves to impose stricter rules on digital asset trading platforms prompted Binance to cease its operations in the country. Binance stated that the new guidance issued for cryptocurrency exchanges in Canada, which relates to stablecoins and investor limits, made it “no longer tenable” for the company to operate in the country. Previously, Binance was under fire from a Canadian provincial regulator for allegedly violating Ontario securities law. Rather than comply with the law or face regulatory scrutiny, Binance opted to pull out of Ontario.

Binance’s Legal Troubles Extend Beyond Canada

In November 2023, the US Department of Justice sought a $4 billion plea deal from Binance to resolve investigations into money laundering, fraud, and sanctions violations. As part of the settlement, former CEO Changpeng ‘CZ’ Zhao agreed to step down from his role and paid a $50 million fine. Zhao was also sentenced to four months in prison in April 2024 after pleading guilty to violating anti-money laundering sanctions regulations.

Conclusion

The hefty fine imposed on Binance by FINTRAC underscores the increasing regulatory scrutiny faced by cryptocurrency exchanges worldwide. As countries tighten their financial regulations to prevent money laundering and other illicit activities, crypto exchanges like Binance must ensure strict compliance to continue their operations. The case serves as a stark reminder for other exchanges about the importance of adhering to AML regulations and reporting large transactions promptly.