Canadian Regulator Slaps Binance With 4M In Fines Over AML, Anti-Terrorism Financing Violations

Canada's Financial Transactions and Reports Analysis Center (FINTRAC) has taken regulatory action against cryptocurrency exchange giant Binance for its alleged violations related to anti-money laundering (AML) and anti-terrorism financing.

"FINTRACT announced today that it has imposed an administrative monetary penalty on Binance Holdings Limited, also operating as Binance Holdings (IE) Ltd., Binance.com, Binance Global and Binance. This foreign money services business was imposed an administrative monetary penalty of CAD$6,002,000 (approximately $4.3 million) on May 7,2024 for non-compliance with Part 1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its associated Regulations," the regulator said in a statement Thursday.

In particular, Binance, the world's largest crypto exchange by trading volume, allegedly failed to register its business with the regulator and failed to report "large virtual currency transactions of CAD$10,000 or more in the course of a single transaction."

Sarah Paquet, FINTRAC's director and CEO, said the country's AML and anti-terrorist financing regulations were established to ensure that Canadian investors are protected. She said the regulatory agency will cooperate with businesses to help them comply with their obligations, but it will "also be firm" with enforcement actions to ensure that crypto companies do their part in complying with Canadian laws.

So far from 2023 through 2024, the regulator has issued violation notices to businesses that violated the act. The notices came in with a collective CAD$26,115,999.50 (approximately $19 million) in fines, FINTRAC said.

Canada's regulatory move against Binance comes on the heels of Changpeng "CZ" Zhao's sentencing in the U.S. late last month. Zhao, Binance's founder and former CEO, was charged with failure to establish a system that protects the crypto exchange's users from illicit transactions.

As part of his plea deal, Zhao pleaded guilty to violating American AML laws and he stepped down from the crypto giant's leadership. He was also ordered to pay a fine of $50 million, while the company he built was slapped with a staggering $4.3 billion fine.

Aside from its latest regulatory woes in Canada, Binance is also faced with an intense legal battle in Nigeria after two of its executives were held against their will by Nigerian authorities late in February. One of the executives remain in Nigerian custody, while the other has reportedly been arrested after fleeing to Kenya.

Despite many issues, Binance has found some relief in Dubai, as the sprawling United Arab Emirates (UAE) city recently handed the crypto titan a virtual asset service provider (VASP) license, which now allows the company to cater to qualified and institutional investors besides retail investors.