Binance Fined $4 Million by Canadian Regulators for Violations
Binance, the world’s largest cryptocurrency exchange by trading volume, faces increasing regulatory challenges as it has been fined 6 million CAD (approximately $4.4 million USD) by Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC). This penalty arises from allegations that Binance failed to adhere to anti-money laundering protocols, specifically related to registering as a foreign money services business and reporting large cryptocurrency transactions.
According to FINTRAC, Binance committed two administrative violations. Firstly, the exchange allegedly failed to register as a foreign currency services business with FINTRAC. Secondly, Binance did not report cryptocurrency transactions of $10,000 or more, along with necessary information, as required by regulations. These violations have led to financial penalties.
Sarah Paquet, Director and CEO of FINTRAC, emphasized the agency’s commitment to helping businesses understand and comply with their obligations. Paquet stated, “Canada’s anti-money laundering and anti-terrorist financing regime is designed to protect the safety of Canadians and the security of our economy. FINTRAC will continue to work with businesses to help them understand and meet their obligations under the Act. We will also steadfastly ensure that businesses continue to do their part and take appropriate action when necessary.”
Regulatory authorities noted that Binance had multiple opportunities to register as a foreign money services business with FINTRAC. However, the exchange allegedly failed to complete the registration within the specified timeframe. Notably, Binance was obligated to register with FINTRAC before ceasing its operations in Canada on September 25, 2023. During this period, FINTRAC claims that Binance violated its registration requirements.
Through blockchain analysis, FINTRAC discovered that Binance failed to report over 5,902 separate instances where it received amounts totaling $10,000 or more in a single transaction. Such omissions violated the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations.
Despite facing increasing regulatory scrutiny, Binance has expressed a commitment to improving compliance by appointing a new board of directors led by the recently appointed CEO, Richard Teng, who replaced the former CEO, Zhao Changpeng, following his four-month prison sentence.
Furthermore, to address growing regulatory demands, the exchange plans to establish a headquarters. This move aims to meet regulators’ requirements for a physical presence and a more robust organizational structure.
