On November 21, 2023, FinCEN registered the virtual currency exchange Binance, which received a record penalty of US$4.3 billion from US authorities for terrorist financing transactions and sanctions violations. Treasury Secretary Janet Yellen revealed, “Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.”
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The financial settlement includes:
- US$3.4 billion, a five-year monitorship, and significant compliance undertakings, including ensuring Binance’s complete exit from the United States, imposed by FinCEN for violations of the Bank Secrecy Act (BSA).
- US$968 million levied by OFAC for violations of multiple sanctions programs.
Binance exhibited significant AML and sanctions shortcomings, such as:
- Failing to prevent and report suspicious transactions with terrorist groups, including Hamas, Palestinian Islamic Jihad (PIJ), Al Qaeda, and ISIS.
- Enabling a range of illicit actors, including terrorists, cybercriminals, and child abusers, to transact freely through its platform.
- Not disclosing transactions with websites devoted to selling child sexual abuse materials, including Dark Scandals.
- Onboarding customers from sanctions countries, including Iran, Syria, North Korea, the Crimea Region of Ukraine, Cuba, Donetsk People’s Republic, and Luhansk People’s Republic.
- Having exposure to darknet markets like Hydra Market, facilitating the purchase and sale of illegal narcotics and controlled substances, drug paraphernalia, counterfeit and fraud-related goods and services, and other illegal contraband.
- Binance CEO Changpeng Zhao has pleaded guilty and agreed to a personal settlement of US$50 million and will step down from Binance.
