Binance, a cryptocurrency exchange, announced that it will require stricter background checks on customers to prevent money laundering.
Binance is the world’s largest cryptocurrency exchange, and it faces scrutiny from countries such as the United Kingdom, Germany, and Japan, which are worried about fraud, money laundering, and lack of consumer protection.
Finance Minister Janet Yellen and European Central Bank President Christine Lagarde also expressed their concerns about money laundering involving cryptocurrency exchanges this year, while SEC Chairman Gary Gensler and Democratic Senator Elizabeth Warren also expressed their concerns. Cryptocurrency exchanges lack consumer protection for investors.
Major cryptocurrency exchange Binance strengthens anti-money laundering checks https://t.co/X67VJ3vcsM pic.twitter.com/qxRlh4b9vl
— CNA (@ChannelNewsAsia) August 20, 2021
Binance users must complete the verification process by presenting their ID, driver’s license or passport in order to access its products and services. The standard is shared by companies such as CoinBase Global Inc and Gemini, and Kraken requires personal information to have limited access to transactions.
“Our goal is to work more with policymakers to raise global standards and stop bad actors,” Binance CEO Changpeng Zhao told Reuters.
Binance hired a former U.S. Department of the Treasury criminal investigator as its global money laundering reporting officer, but some lawyers believe that this will help the company to appease regulators.
“This is a good marketing statement, but from the perspective of the regulatory agency, it is not enough. Since it is done voluntarily, the regulatory agency does not know whether they have the authority to supervise identity verification, and no one can tell what they did. Is it appropriate.” Alireza Siadat, Partner of Annerton Law Firm in Frankfurt.
»Binance appoints former U.S. Treasury Department law enforcement officers as anti-money laundering work-CoinDesk https://t.co/KzuuG7jzF4
— CZ _ Binance (@cz_binance) August 19, 2021
This move was made after increasing pressure for more regulation, especially pressure from Warren, who compared the crypto market to the “Wild West” and recently wrote a letter to Gensler , Asked him to crack down on encrypted transactions and implement supervision.
“I am writing to request information about the authority of the U.S. Securities and Exchange Commission (SEC) to properly regulate cryptocurrency transactions, and to determine whether Congress needs to take action to ensure that the SEC has the appropriate powers to compensate for the regulatory changes that have led to investors and consumers. Existing vulnerabilities under attack are at risk in this highly opaque and volatile market,” Warren’s letter began.
A few weeks later, Gensler responded: “I believe we need more permissions to prevent transactions, products and platforms from falling into regulatory loopholes. We also need more resources to protect investors in this growing and turbulent industry.” A letter to warren.
Warren also wrote A letter to Yellen Ask her to develop a “coordinated” regulatory strategy.
