New Details of Binance’s Compliance Requirements Emerge in Unsealed Court Docs

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New details have emerged surrounding Binance’s compliance requirements in the wake of the crypto exchange’s plea deal with the U.S. government, according to recently unsealed court documents.

A forceful compliance agreement

According to the court documents, Binance will be mandated to conduct period-risk based reviews, internal reporting and investigation, implement anti-circumvention controls, and “develop, enhance, and promulgate a clearly articulate and visible corporate policy against violations” regarding U.S. sanctions and anti-money laundering laws.

Furthermore, Binance must provide training and guidance to ensure all those involved in the company accurately and efficiently follow compliance commitments.

Equally important, Binance has agreed to retain an “independent compliance monitor” for a minimum period of three years.

“The monitor’s primary responsibility is to assess and monitor the company’s compliance with the terms of the agreement, including the company’s compliance programs, policies, procedures, codes of conduct, systems and internal controls,” reads a recently unsealed court document.

FinCEN’s monitorship

“What’s most incredible about the DOJ monitorships and oversight is that DOJ is not the only infrastructure of US governmental oversight thrust upon Binance,” stated John Reed Stark, former chief of the SEC Office of Internet Enforcement. “There are also the FinCEN monitorships, which are equally extensive, forceful and titanic.”

Consequently, Binance will face five years of aggressive oversight from the Financial Crimes Enforcement Network.

“The stark reality is that neither Binance nor any other mega-crypto firm (or any financial firm in the world for that matter) has ever been party to a DOJ/FinCEN plea agreement commanding governmental oversight as vigorous, forceful and all-inclusive as the one Binance has agreed to undertake (and pay for),” Stark wrote.

Going forward

As part of their plea deal, Binance will have to pay $4.3 billion in penalties as well as make a “complete exit” from the U.S. market.

Richard Teng, former head of global markets for Binance who has since taken over Zhao’s role as CEO, stated in a company blog post that he is “excited for the opportunity to engage in a meaningful conversation with global policymakers” and looking forward to ensuring “the long-term sustainability of crypto.”

However, the stringent requirements brought forward by the federal government could spell trouble for the world’s largest crypto exchange.

Stark claims that “these multiple monitorships will undoubtedly create extraordinary and unique opportunities for law enforcement and regulatory investigative and litigation teams to identify and utilize a perpetual stream of newly discovered inculpatory evidence.” 

Meanwhile, Binance’s founder and former CEO, Changpeng “CZ” Zhao, has pleaded guilty to numerous federal law violations. His sentencing is currently scheduled for February 23rd, 2024.

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