Playing by the Rules: An Overview of Binance’s Compliance Program
Main Takeaways
In the second issue of our Playing by the Rules series, we look at the structure of the Binance Compliance team, as well as the lines of work that each of its subdivisions handles.
The Binance Compliance team consists of professionals with diverse backgrounds, including former law enforcement officers, regulators, crypto, fintech, and traditional banking compliance experts. The company makes substantial investments in technology and strategic partnerships to enhance its compliance capabilities.
Binance has established specialized departments within its compliance team to address various areas such as financial crimes, global money laundering reporting, sanctions, corporate compliance, customer due diligence, high-risk clients, and transaction monitoring, ensuring a robust and proactive approach to regulatory compliance.
As the world's leading digital asset ecosystem, Binance has access to the largest datasets of transactions that, when combined with the data from our blockchain analytics partners, help us arrive at the most comprehensive mapping and identification of potentially illicit activities in the crypto industry. This data helps us protect our users from falling victim to financial crime.
Recognizing the central role of compliance in protecting users and driving the adoption of digital assets, Binance maintains a comprehensive and well-rounded compliance program that addresses the most pressing concerns in the crypto industry. In recent years, Binance has significantly expanded its compliance team and has been continuously investing in technology and specialized capabilities to address evolving challenges in the industry.
Today, the Binance Compliance team operates with a structure that is similar to such teams that one may find in other large global financial institutions. What sets Binance apart is the unique experience and expertise that its team members bring to their positions, along with their close collaboration with Binance’s product and technology teams to effectively manage risk. The Compliance team brings together specialists with diverse backgrounds, including former law enforcement officers, regulators, crypto and fintech compliance experts, and traditional banking compliance professionals.
Department Structure
The compliance team at Binance is divided into specialized departments, each responsible for specific functions and areas of expertise. These departments include Financial Crimes, Global Money Laundering Reporting Officer (GMLRO), Sanctions/ABC/CTF, Corporate Compliance, Customer Due Diligence, High-Risk Clients, and Transaction Monitoring.
Financial Crimes Compliance
The Financial Crimes Compliance team is a crucial component of Binance's compliance program. This team serves as the proactive investigation frontline against illicit activity on the platform. By actively combating financial crimes such as money laundering, fraud, and terrorist financing, they contribute to safeguarding Binance and its users from a wide range of potential risks.
Within the Financial Crimes team, there are various specialized roles that work together to effectively identify, investigate, and report potential instances of financial misconduct. These roles include investigators, a dedicated unit responsible for handling suspicious activity reports, a global training group, and a law enforcement response team that deals with approximately 1,300 requests each week. Binance employs several teams that regularly engage with law enforcement agencies and officials, which are collectively staffed with over 70 members.
From January to November 2023, Binance processed around 53,000 law enforcement requests, serving nearly 13,000 registered law enforcement officers worldwide through its Government Law Enforcement Request System. This is in addition to over 50,000 requests that Binance processed in 2022.
A dedicated Law Enforcement Training Team, supported by the Investigations Team, regularly organizes training sessions where Binance’s experts share their experience in preventing and investigating cybercrime with law enforcement officials around the globe. In 2023, they delivered 120 onsite or online trainings and workshops globally.
Global Money Laundering Reporting
The team of the Global Money Laundering Reporting Officer (GMLRO) plays a critical role in ensuring compliance with global anti-money laundering (AML) regulations. This team consists of four regional leads and over 60 professionals who work diligently to detect, monitor, and prevent potential money laundering-related activity. They collaborate closely with local Financial Intelligence Units, regulators, and law enforcement agencies, reporting and assisting in the investigation of suspicious actors and transactions. Additionally, the GMLRO team closely monitors the evolving regulatory landscape to ensure Binance's full compliance with applicable laws and regulations.
Sanctions/ABC/CTF
The Sanctions, Anti-Bribery & Corruption (ABC), and Counter-Terrorist Financing (CTF) team within the compliance department is responsible for establishing and maintaining policies and controls to mitigate risks associated with violations of applicable sanctions, Anti-Bribery and Corruption laws, and Counter-Terrorist Financing measures. This team continuously monitors changes in legislation related to its areas of expertise, incorporating any prohibitions into Binance policies and procedures. By doing so, they define the organization's acceptable risk levels and guide business partners to deter and protect the platform from bad actors engaging in illicit activities.
Corporate Compliance
Binance’s Corporate Compliance team comprises specialists with backgrounds in crypto, payments, and traditional banking who bring their compliance and risk management skills to support the “second line” of the organization’s defense.
The team is responsible for a number of areas, including the monitoring and testing of compliance controls; handling regulatory examinations and audits for Binance's licensed entities; ensuring that compliance controls are embedded in all Binance products and services; overseeing third-party due diligence efforts; developing enterprise-wide and country-level AML/CFT risk assessments, issue management and governance initiatives, and developing and overseeing company-wide mandatory compliance training.
Customer Due Diligence
The Customer Due Diligence (CDD) team at Binance is responsible for implementing robust Know-Your-Customer (KYC) and Know-Your-Business (KYB) programs, which play a crucial role in preventing fraud, identity theft, money laundering, and other illicit activities by verifying the identities of Binance's customers and business partners. The CDD team ensures compliance with applicable regulatory requirements while balancing it with the need for a frictionless user experience.
High-Risk Clients
The High-Risk Clients’ team focuses on overseeing enhanced due diligence processes for customers and businesses classified as high-risk. They work closely with the CDD team to establish more stringent verification measures and monitor the activities of such clients, further reducing the risk of illicit activity on the platform.
The team also advises the colleagues in the first line of defense on matters related to establishing sources of funds and wealth verification for retail customers, as well as AML programs and regulatory licensing assessments of Binance’s corporate clients.
Transaction Monitoring
The Transaction Monitoring team at Binance is responsible for auditing transactions for potential money laundering and terrorist financing activities. They leverage cutting-edge technology and sophisticated analytical tools to detect suspicious patterns and identify potential risks. This team is instrumental in maintaining the integrity of the platform and ensuring compliance with global regulations related to money laundering and terrorist financing. The team consists of experts specializing in both fiat and crypto.
Building Tech and Forging Partnerships
In addition to the expertise of the core compliance team, Binance has also made substantial investments in cutting-edge technology and strategic partnerships to enhance its compliance capabilities. This includes collaborations with leading regulatory technology (RegTech) vendors and the development of proprietary tools to monitor transactions, detect potential risks, and enhance compliance processes.
As the world's leading crypto exchange, Binance has access to the largest datasets of transactions that, when combined with the data from our partners such as blockchain analytics firms Chainalysis, TRM, and Elliptic, help us arrive at the most comprehensive mapping and identification of potentially illicit activities in the crypto industry. This data helps us detect and prevent the instances of misuse of our platform for illicit purposes and helps us protect our users from falling victim to scams and other forms of financial crime.
By prioritizing compliance, Binance aims to provide a secure and transparent platform for users to explore the world of Web3 while mitigating risks associated with financial crimes, money laundering, and other forms of illicit activity.
This article was edited on November 23, 2023, to update the number of law enforcement requests processed and law enforcement training sessions delivered by Binance.
Further Reading
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