US prosecutors probing Binance over AML compliance since December 2020 – Reuters

U.S. pros­e­cu­tors have been prob­ing Binance’s anti-mon­ey laun­der­ing com­pli­ance, oper­a­tions, and inter­nal com­mu­ni­ca­tions since Decem­ber 2020, Reuters report­ed on Sep. 1, cit­ing peo­ple famil­iar with the investigation.

The report said the U.S. Jus­tice Depart­ment sent the exchange a let­ter request­ing the exchange to vol­un­tar­i­ly pro­vide records of com­mu­ni­ca­tion involv­ing founder Chang­peng Zhao and 12 oth­er exec­u­tives and part­ners over the detec­tion of ille­gal trans­ac­tions and its acqui­si­tion of U.S.-based customers.

Accord­ing to the report, pros­e­cu­tors also request­ed com­pa­ny records that con­tained instruc­tions to destroy files or trans­fer records out­side the U.S.

The reg­u­la­tor request­ed infor­ma­tion on Binance busi­ness­es in the U.S. It also asked for details of its anti-mon­ey laun­der­ing and sanc­tions com­pli­ance measures.

Accord­ing to the report, the request was based on an inves­ti­ga­tion into the exchange’s com­pli­ance with the Bank Secre­cy Act. The law requires cryp­to exchanges with­in the U.S. to reg­is­ter with the Trea­sury Depart­ment and com­ply with anti-mon­ey laun­der­ing measures.

Regulator questioned Binance.US rationale

Reuters report­ed that the Jus­tice Depart­ment 2020 let­ter request­ed doc­u­ments relat­ing to the “busi­ness ratio­nale” in estab­lish­ing Binance.US.

The reg­u­la­tor report­ed­ly asked Zhao and 12 oth­er exec­u­tives, includ­ing co-founder Yi He, and chief com­pli­ance offi­cer, Samuel Lim, about the rela­tion­ship between Binance and Binance.US.

Binance.US was launched in 2019 by Binance (the par­ent com­pa­ny) and is reg­is­tered with the U.S. Trea­sury Department.

How­ev­er, the par­ent company’s opaque struc­ture has mys­ti­fied reg­u­la­tors world­wide, who have warned users about the exchange sev­er­al times.

Recent­ly, the Dutch cen­tral bank fined the firm over €3 mil­lion for vio­lat­ing its finan­cial laws.

Mean­while, Binance has upped its reg­u­la­to­ry com­pli­ance mea­sures and has scored sev­er­al approvals from reg­u­la­tors in Italy, France, Dubai, and oth­er countries.

SEC subpoenaed Binance.US operators

Reuters also revealed that the Secu­ri­ties and Exchange Com­mis­sion (SEC) sub­poe­naed Binance.US’s oper­a­tor, BAM Trad­ing Services.

Accord­ing to Reuters’ report, the sub­poe­na inquired about ser­vices BAM pro­vid­ed for Binance.US and whether any employ­ees also worked for the par­ent exchange.

Binance response

Reuters could not deter­mine how Binance respond­ed to the regulator’s demands.

Mean­while, Binance Chief Com­mu­ni­ca­tions Offi­cer Patrick Hill­mann report­ed­ly said:

“Reg­u­la­tors across the globe are reach­ing out to every major cryp­to exchange to bet­ter under­stand our indus­try. This is a stan­dard process for any reg­u­lat­ed orga­ni­za­tion and we work with agen­cies reg­u­lar­ly to address any ques­tions they may have.”

Hill­mann added that the exchange had a com­pli­ance team staffed with for­mer reg­u­la­tors and law enforce­ment agents.

Chang­peng Zhao also tweet­ed that the exchange com­plied with the 2020 reg­u­la­to­ry demands.

Anoth­er sto­ry today about a cryp­to com­pa­ny receiv­ing an inquiry from a reg­u­la­tor. A request to VOLUNTARILY share cer­tain infor­ma­tion back in 2020, which we did. Impor­tant for the indus­try to build trust with regulators.

My chat mes­sages are semi-pub­lic any­way. pic.twitter.com/h35Xd4tZhf

— CZ 🔶 Binance (@cz_binance) Sep­tem­ber 1, 2022