Australia’s Australian Transaction Reports and Analysis Centre (AUSTRAC) has ordered Binance Australia to appoint an external auditor after identifying serious weaknesses in the crypto exchange’s anti-money laundering and counter-terrorism financing (AML/CTF) systems.
Investbybit Pty Ltd, Binance Global’s Australian arm, is an AUSTRAC-registered digital currency exchange provider. Binance was founded in 2017 and is now the world’s largest crypto exchange by trading volume, operating in about 20 countries.
AUSTRAC CEO Brendan Thomas said the move follows the agency’s National Risk Assessment 2024, which highlights growing risks of criminal abuse in digital currencies.
“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,” Thomas said.
AUSTRAC flagged issues, including a limited scope of Binance’s independent review, high staff turnover, insufficient local resources, and weak senior management oversight.
The regulator said international exchanges must have strong customer identification, due diligence, and transaction monitoring, especially in high-risk markets.
Thomas urged digital currency platforms to monitor suspicious activity, including scams, cybercrime, and terrorism financing. “All digital currency operators need to ensure they are complying with Australian law and limiting their exposure to crime,” he said.
Binance Australia has 28 days to pick AUSTRAC-approved auditors. The audit will check if its rules against money laundering and terrorism financing meet Australian standards and protect crypto from misuse.
In May 2024, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) fined Binance CAD$6 million (approximately $4.4 million USD) because it had not registered as a foreign money services business and had not reported large transactions of virtual currencies of CAD$10,000 or more.
In 2021, the Financial Conduct Authority (FCA) of the United Kingdom instructed Binance Markets Limited to cease all regulated activities because of its non-compliance with AML regulations.
In February 2024, a United States federal judge accepted a plea agreement in which Binance and its founder agreed to pay more than $4.3 billion in fines and restitution after the company and its founder pleaded guilty to violating anti-money laundering laws and breaking sanctions.
These international efforts demonstrate the growing regulation of cryptocurrency exchanges to enhance their AML/CTF controls and be in compliance with local regulations.