FINTRAC fines crypto giant Binance $6 million for flouting anti-money laundering laws

The penalty comes shortly after an Ontario court certified a class action against the firm.

Binance, the world’s largest cryptocurrency exchange, has been hit with an approximately $6-million CAD fine from Canada’s anti-money laundering agency.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) found that Binance committed two violations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. FINTRAC claimed that Binance failed to register as a foreign money services business and to report large virtual currency transactions.

This marks a small price compared to the $4.3 billion Binance has agreed to pay in the US.

This monetary penalty from FINTRAC is a small price compared to what the crypto company recently agreed to pay for evading United States (US) anti-money laundering laws. Binance has settled for $4.3 billion USD as part of its US plea deal.

Earlier this month, Binance founder and former CEO Changpeng Zhao, also known as ‘CZ,’ was sentenced to four months in prison.

Last month, Ontario’s Superior Court of Justice certified a class-action lawsuit against Binance alleging that the company sold crypto derivative products to retail investors without registering with regulators, violating the provincial Securities Act and federal laws.

Though Binance was initially established in China, it has ties to Canada: Zhao was raised here and graduated from McGill University, and the firm previously catered to Canadian clients.

In 2021, Binance announced it was pulling out of Ontario as regulators began cracking down on unregulated crypto trading platforms. Despite this retreat, Binance continued operating in Canada and headed west, incorporating in Alberta in 2022.

RELATED: Binance exits Canada as crypto trading platforms feel broader impact of stricter regulations

Last year, as Canadian securities regulators tightened the rules for crypto trading platforms operating in the country, Binance exited Canada altogether. But FINTRAC claimed Binance violated registration requirements up until Sept. 25, 2023, when it ceased all operations in Canada. Binance was given several chances to register but missed deadlines, FINTRAC said.

Businesses like banks, real-estate brokers, casinos, and money services companies are required to report certain transactions, including suspicious ones and those involving large sums of cash or virtual currency, to FINTRAC. The financial intelligence agency said it analyzed the blockchain and found 5,902 transactions valued at the reporting threshold of $10,000 or more that Binance failed to report between June 1, 2021 and July 19, 2023.

According to The Globe and Mail, this marks the first monetary penalty that FINTRAC has levied against a crypto platform.

Crypto firms are not the only companies in Canada facing money laundering challenges. As TD Bank continues to contend with a lengthy probe in the US tied to a large criminal operation, the head of the Office of the Superintendent of Financial Institutions, Canada’s banking regulator, has argued that Canadian banks need to get better at curbing money laundering.

Feature image courtesy Unsplash. Photo by Kanchanara.

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