Canada’s FinTRAC imposes $6-million penalty on Binance for anti-money laundering violations

Canada’s anti-money-laundering agency, FinTRAC, has imposed a $6-million penalty on Binance Holdings Ltd., the world’s largest cryptocurrency exchange. This marks the first monetary penalty issued by the financial intelligence unit against a virtual currency trading platform.

The penalty was levied after FinTRAC found that Binance had committed two violations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The first violation was the failure to register as a foreign money services business. Despite pulling out of the Canadian market last year, Binance was found to be in violation of its registration requirements before officially ceasing operations in the country.

The second violation relates to large virtual currency transactions, which are red flags for potential money laundering activity. FinTRAC analyzed the blockchain and found 5,902 transactions valued at $10,000 or more that Binance had failed to report between June 1, 2021, and July 19, 2023.

Jessica Davis, president of Insight Threat Intelligence, noted that the penalties imposed by FinTRAC are significantly lower than those paid by Binance in the U.S. due to differences in legal systems. In Canada, administrative penalties are not meant to be punitive but rather collaborative, working with businesses to ensure compliance.

Binance is facing legal issues in multiple jurisdictions, with two executives detained in Nigeria on tax evasion and money-laundering charges. The exchange’s founder, Changpeng Zhao, has been sentenced to four months in U.S. prison for evading anti-money-laundering rules.

The cryptocurrency sector is under increased scrutiny globally, with recent high-profile cases such as the 25-year prison sentence for Sam Bankman-Fried, the collapse of FTX, and plans for FTX to launch in Canada before its implosion in late 2022.