In a significant regulatory action, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has imposed a $4.4 million administrative monetary penalty on Binance Holdings Limited. The fine, announced on May 9, 2024, is a result of Binance's failure to comply with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations.
Key Violations
According to FINTRAC, Binance committed several administrative violations, including:
- Failure to Register: Binance did not register as a foreign money services business (FMSB) with FINTRAC.
- Failure to Report: The company failed to report large virtual currency transactions exceeding $10,000, as required by Canadian law.
Timeline of Non-Compliance
The violations occurred during a period when Binance was winding down its operations in Canada. Specifically, FINTRAC reported 5,902 separate transactions of $10,000 or more in cryptocurrency on the exchange from June 2021 to July 2023. Despite being given multiple opportunities to register with FINTRAC, Binance did not complete its registration by the provided deadlines.
"Binance Holdings Limited was provided with several opportunities to register with FINTRAC as an FMSB; however, they did not complete their registration by the deadlines provided," said FINTRAC. "It should be noted that Binance Holdings Limited was deemed to be an FMSB and was required to be registered with FINTRAC up until September 25th, 2023, when it officially ceased all operations in Canada. Up until that day, Binance Holdings Limited was in violation of its registration requirements."
Regulatory Context
The $4.4 million penalty, equivalent to 6,002,000 CAD at the time of publication, is separate from other legal challenges Binance has faced globally. In November 2023, Binance settled with U.S. authorities, agreeing to pay $4.3 billion in penalties. As part of that settlement, Changpeng Zhao, the company's CEO, stepped down and pleaded guilty to one felony charge, resulting in a four-month prison sentence.
In Nigeria, two Binance executives were arrested in February 2024 on charges of tax evasion and money laundering. One of the executives reportedly escaped to Kenya, but Interpol has indicated its readiness to extradite him back to Nigeria, where court proceedings are set to resume on May 17, 2024.
Official Statements
Sarah Paquet, Director and Chief Executive Officer of FINTRAC, emphasized the importance of compliance with Canada's AML and CFT regulations.
"Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime is in place to protect the safety of Canadians and the security of Canada’s economy. FINTRAC will continue to work with businesses to help them understand and comply with their obligations under the Act. We will also be firm in ensuring that businesses continue to do their part and we will take appropriate actions when they are needed," she stated.
As of the time of publication, Binance has not responded to requests for comment regarding the FINTRAC penalty. The company had previously announced in May 2023 that it planned to exit the Canadian market, citing regulatory concerns.
The $4.4 million fine imposed by FINTRAC on Binance underscores the importance of regulatory compliance in the rapidly evolving cryptocurrency landscape. As Binance navigates its legal challenges across multiple jurisdictions, the case highlights the broader implications for the crypto industry and the necessity for stringent adherence to financial regulations.
