How Binance Fights to Keep People in Blocked Jurisdictions Off Our Platform
Chagri Poyraz is Binance’s Global Head of Sanctions with almost two decades of experience in risk management and building industry-leading compliance programs. Here he shares his thoughts on Binance’s commitment to compliance, and how we work hard to keep people in blocked jurisdictions off our platform.
Since we pivoted as a company, the culture of compliance has been hammered into every employee on a daily basis. Beyond establishing a culture of compliance, we have invested tens of millions of dollars in our compliance program and grown our in-house compliance-supporting headcount to some 750 world-class experts. We are confident our program today parallels what you will find at most traditional financial institutions, many of whom have been in business for over a century compared to Binance, which just launched in 2017.
One of the key elements of the program is our Sanctions Compliance unit, whose job is to make sure that people residing in blocked jurisdictions do not use our platform, and our team is very good at its job. There are people who are not allowed to access Binance because of where they reside. We sympathize with them, but this is non-negotiable – this is the law. The United States, obviously, is not a sanctioned country, but we have strict rules in place that ensure U.S. residents cannot access our global exchange, Binance.com.
Around the world, there are people who tend to be clever and unyielding, employing various techniques to try to circumvent these restrictions. To counter them, our Sanctions Compliance team has several layers of controls. But just like in every other regulated organization, this is an ongoing battle as new technologies and strategies are being developed by illicit actors every day.
A basic measure we use to prevent such users from accessing the global platform is by looking at their IP addresses.
Now, we are keenly aware that people use VPN services to conceal their IP addresses for various reasons. We do not assume that everyone who uses a VPN is a malicious actor or sanctions evader: we treat VPN, first and foremost, as a privacy tool. Frankly, society has gotten extremely comfortable skirting local regulations and companies’ terms of use, particularly on streaming platforms like Netflix, Disney+, Spotify, and many others. While some may turn a blind eye to that sort of activity, we have put in place cutting-edge technologies to address these issues.
In addition to VPN detection, Binance uses a number of other tools and indirect indicators to further determine with high accuracy whether a user has misrepresented their residence in an attempt to improperly use the platform. (Please note that Binance can’t enumerate all the techniques we use lest we give these actors a roadmap to evading our controls).
If we suspect that a user is physically in a sanctioned or blocked country, our system will trigger a request for information, inquiring about the reasons for and circumstances of the user being there. This can be cumbersome for our users but it’s a critical control that ensures we remain compliant.
Once again, this is an ongoing battle, and people constantly come up with ways to try and get around the most sophisticated restrictions and controls, including by using fake IDs and various ways to obfuscate their location. We are committed to identifying and immediately offboarding such individuals, and our Sanctions Compliance team has unmatched expertise, advanced technology, and sophisticated controls and processes to enforce the rules and ensure Binance is fully compliant. We are committed to continued investment in these controls to keep us ahead of the game.