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Currently, Binance’s compliance team consists of 500 members who safeguard the platform against illicit activities such as money laundering, fraud, and terrorist financing.
Binance is ramping up its efforts to strengthen compliance measures globally. According to a recent Bloomberg report, the world’s largest crypto exchange is planning a major workforce expansion, aiming to hire around 1,000 new employees by the end of 2024. Notably, around 200 of these positions will be dedicated solely to bolstering its compliance team.
As per the report, Binance is aiming to allocate over $200 million this year towards regulatory compliance. This move comes as Binance grapples with a series of compliance challenges in multiple countries.
Legal Troubles
Binance has faced significant legal troubles in the United States, including facing criminal charges for failing to prevent illicit activities on its platform. It entered a plea agreement with the Department of Justice (DOJ) in 2023, paying a hefty $4.3 billion penalty. Despite this settlement, Binance remains trapped in a separate legal battle with the US Securities and Exchange Commission (SEC), facing allegations of offering financial securities without proper registration.
In response to these challenges, Binance has engaged two monitors, Forensic Risk Alliance and Sullivan & Cromwell, to conduct a thorough assessment of its financial statements and transaction tracking systems.
The exchange’s regulatory issues extend beyond the United States. Last year, Brazil accused Binance of running a fraudulent pyramid scheme. Moreover, Brazil’s SEC had previously banned it from offering derivatives products in 2020. However, the exchange has agreed to pay $1.75 million in a settlement with the regulator.
In India, earlier this month, Binance settled a $2.25 million penalty with the Financial Intelligence Unit, allowing it to fully resume operations in the country. Regulatory challenges in other regions, including Japan, South Korea, and Singapore, have also mandated the exchange to comply with local regulations.
Binance’s Compliance Efforts
Currently, Binance’s compliance team consists of 500 members who safeguard the platform against illicit activities such as money laundering, fraud, and terrorist financing. In 2023, this team processed over 58,000 law enforcement requests, working closely with authorities to combat financial crime. Interestingly, Binance CEO Richard Teng told Bloomberg that the number of requests from law enforcement agencies worldwide has surged this year, it has reached 63,000 so far in 2024.
Additionally, Binance’s specialized teams for sanctions, anti-bribery, and corruption (ABC) continuously monitor legislative changes to align policies and deter bad actors. The Global Money Laundering Reporting Officer (GMLRO) team, alongside the High-Risk Clients team, implements enhanced due diligence and monitors high-risk transactions to mitigate potential threats.
It is interesting to note that Teng himself has extensive experience in regulatory compliance. He has previously served as a senior regulator at the Monetary Authority of Singapore and as the CEO of the Financial Services Regulatory Authority at Abu Dhabi Global Market.
Under Teng’s leadership, Binance has changed its interaction with prime brokers, implemented stricter criteria for listing new cryptocurrencies, and separated its venture arm into an independent entity.
