Crypto giant to pay $4bn to settle AML and sanctions violations

Binance CEO Changpeng Zhao has stepped down from his role, and his company has agreed to a $4.3 billion settlement for violating US anti-money laundering laws (‘AML’) and sanctions obligations in what the US Justice Department called ‘one of the largest penalties we have ever obtained from a corporate defendant in a criminal matter.’

The terms of the settlement also impose a five-year monitorship, and require significant compliance undertakings, ‘including to ensure Binance’s complete exit from the United States,’ the US Treasury Department said, 21 November.

‘The violations include failure to implement programs to prevent and report suspicious transactions with terrorists – including Hamas’ Al-Qassam Brigades, Palestinian Islamic Jihad (PIJ), Al Qaeda, and the Islamic State of Iraq and Syria (ISIS) – ransomware attackers, money launderers, and other criminals, as well as matching trades between U.S. users and those in sanctioned jurisdictions like Iran, North Korea, Syria, and the Crimea region of Ukraine,’ it said.

‘Binance admits that it willfully operated as an unregistered money services business (MSB) while obscuring its ties to the U.S. and maintaining its most commercially important U.S. customers,’ it added.

Binance agreed to a FinCEN penalty of $3.4 billion and an OFAC fine of $968 million, the largest ever for each agency.

Treasury said that between August 2017 and October 2022 Binance executed more than 1.67 million virtual currency trades on its platform between US persons and users in sanctioned jurisdictions and blocked persons.

‘It willfully enabled hundreds of millions of dollars in transactions between American users and users subject to U.S. sanctions,’ said Attorney General Merrick Garland.

He said Zhao and other senior managers at Binance understood that the company was required by US law to register with the Treasury Department as a money services business and implement an effective anti-money laundering program: ‘They failed to do either.’’ 

‘In part because of the crimes it committed, Binance became the largest cryptocurrency exchange in the world. Now Binance is paying one of the largest corporate penalties in U.S. history,’ he added.

Binance also agreed to retain an independent compliance monitor for five years, whose mandate will include review and assessment of Binance’s sanctions compliance program.