On August 22, Australia’s financial watchdog, AUSTRAC, ordered Binance to strengthen its anti-money laundering controls within 28 days, over terror funding concerns, with global ongoing regulatory clashes.
The mandate follows Binance’s 2023 $4.3 billion US guilty plea for similar violations of terrorism financing and succeeds the exchange’s loss of Australian banking partnerships and its derivatives license.
Now, an independent auditor will assess gaps in monitoring illegal flows, amid internal reports of weak oversight and high staff turnover.
AUSTRAC’s latest review of the Binance money laundering scandal revealed weak management oversight, high staff turnover, and inadequate resources, raising concerns about the government. As part of the decision, AUSTRAC will appoint an independent auditor, though Binance may suggest candidates.
Cryptocurrency Rule of Terror
The reign of terror crypto from Binance is not the first regulatory clash.
Back in 2023, founder Changpeng Zhao pleaded guilty in the US and agreed to a $4.3 billion penalty for money laundering, unlicensed money transmission, and sanctions violations.
The US Department of Justice (DoJ) accused Binance of indulging in terror finance conduct, prioritizing profits over consumer safety. Investigators uncovered internal communications that highlighted the crypto funding terrorism problem.
One compliance staffer wrote, “we need a banner ‘is washing drug money too hard these days – come to binance we got cake for you.’”
Australia has also heightened up its crypto terrorist financing scrutiny.
In 2024, the Australian Securities and Investments Commission (ASIC) revoked Binance Australia Derivatives’ license after a lawsuit citing inadequate risk management and compliance failures.
“Big global operators may appear well resourced and positioned to meet complex regulatory requirements, but if they don’t understand local money laundering and terrorism financing risks, they are failing [to meet their obligations to consumers],” said AUSTRAC CEO Brendan Thomas.
Crypto’s role in terrorist financing struggles in Australia highlight a wider global trust crisis confronting the crypto giant. Worldwide, regulators are enforcing stricter controls over digital asset exchanges, requiring higher anti-money laundering and counter terrorism safeguards.
The company’s record of regulatory battles from the $4.3 billion US Department of Justice settlement to license revocations across multiple nations underscores issues of poor compliance and a culture of profits at the expense of people.
These repeated failures have increased the skepticism of policymakers and investors alike, who see Binance as representative of the risks in the crypto space. As the investigations become increasingly, Binance can restore credibility remain doubtful.
Binance’s Australian Terror Funding
Binance’s reputation in Australia suffered after losing key banking relationships.
Earlier this year, the company was forced to halt its Australian dollar trading services when payments provider Zepto ended their collaboration. This followed a separate fallout with Cuscal, another financial services partner, which cut off access to its platform due to crypto and terrorism.
Thomas stressed that companies must tailor their compliance practices to local condition against terror funding, saying that “understanding specific risks of criminality in the Australian context is crucial to ensure they’re meeting their reporting obligations here.”
Despite the regulatory setbacks of crypto anti-money laundering, Binance insists it is cooperating against crypto counter terrorism.
“We have engaged openly and transparently with Austrac over the past several months and continue to value their guidance, expertise, and oversight,” said general manager of Binance Australia and New Zealand, Matt Poblocki.
“We remain committed to maintaining best-in-class compliance standards and will continuously enhance our capabilities.”
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