13 suspicious accounts totalling $1.7 billion since 2021   

According to a report in the Financial Times.

• Suspicious accounts continued to operate on Binance even after the world’s largest exchange agreed to stricter AML controls as part of a 2023 settlement with the U.S..

In November 2023,

• Binance settled with FinCEN and OFAC for sanctions violations and Bank Secrecy Act violations, agreeing to pay a total penalty of $4.368 billion.

Settlement Summary

• Financial Crimes Enforcement Network (FinCEN):
• Binance was found to have wilfully violated the Bank Secrecy Act by failing to implement an effective anti-money laundering (AML) program.
• They agreed to pay a $3.4 billion civil penalty.
• A five-year federal monitorship was imposed to oversee Binance’s compliance and ensure necessary reforms—including an exit from the U.S. market—were fully executed. [fincen.gov]
• Office of Foreign Assets Control (OFAC):
• Binance admitted to 1,667,153 apparent sanctions violations spanning from 2017 to 2022, involving U.S. persons and transactions with sanctioned territories or individuals.
• OFAC assessed a $968,618,825 penalty and required the retention of an independent sanction’s compliance monitor for five years. [ofac.treasury.gov]
• This brings the total settlement amount to approximately $4.368 billion.

Notable Details

• The violations included allowing U.S. users to trade with blocked entities or in sanctioned countries like Iran, North Korea, Syria, and Crimea. [binance.com]
• These fines represent the largest-ever penalties issued by both FinCEN and OFAC, underscoring the severity of Binance’s compliance lapses. [fincen.gov], [ofac.treasury.gov]
• In addition to financial penalties, Binance is under intensive oversight expected to bring substantial AML and sanctions compliance reforms.

The settlement also resulted in

• The resignation of then-CEO Changpeng Zhao and

However, leaked internal files seen by the FT suggest that

• Binance failed to prevent suspicious accounts from transacting after November 2023, with some such accounts moving eight- or nine-figure sums.

$144 million in suspicious transfers

• The leaked internal data concern 13 suspicious accounts that have been involved in transactions totalling $1.7 billion since 2021 and $144 million since the November 2023 settlement.
• This includes one account registered to a 25-year-old Venezuelan woman,
• Who received just over $177 million in crypto in the two years following April 2022.
• This account also changed its payment details 647 times between January 2023 and March 2024, including 496 separate accounts at banks throughout the Americas.
• Another suspicious account was registered to a 30-year-old junior bank employee residing in Caracas.
• The account received $93 million between 2022 and May of this year and transferred out a comparable amount in crypto.
• One red flag with this account was that IP logs showed it was accessed in Caracas at 3.56 pm on February 24 of this year, and then in Japan at 1.30 am the next day.
• The 13 accounts assessed by the FT were registered in Venezuela, Brazil, Syria, Niger, and China.
• Between February 2022 and March 2023, all 13 of them received a total of $29 million in the stablecoin USDT from accounts that Israel later froze for links to terrorism financing.
• Most of the $29 million had come from four cryptocurrency wallets associated with Syrian Tawfiq Al-Law, who has been alleged to have transferred illicit funds for Hezbollah, the Houthis in Yemen and a company with links to the Assad regime.
• Israel seized these four accounts in May 2023, while OFAC imposed sanctions on Al-Law in March 2024.

While the 13 leaked accounts have moved considerable quantities in crypto and fiat, the available data suggest that they may have been less active since November 2023.

• Binance, which told the FT that it has “robust systems in place to flag and investigate suspicious transactions and take action where appropriate, including restricting accounts in line with our regulatory obligations.”
• The newspaper noted there is no indication that Binance breached sanctions law by making or receiving transfers from individuals or entities after they had been officially sanctioned.
• Failure to satisfy its obligations under the 2023 settlement could result in Binance facing further financial penalties, including a $150 million suspended penalty.

As noted above, as set out in the U.S. Treasury’s November 2023 press release, the settlement also imposes a five-year FinCEN monitorship on Binance, with monitors supposed to

• “Oversee remedial undertakings,”
• “Conduct periodic reviews”, and
• “Report to FinCEN, OFAC, and the CFTC on its findings,”

Source

• https://decrypt-co.cdn.ampproject.org/c/s/decrypt.co/353279/binance-failed-to-prevent-suspicious-accounts-from-moving-144m-after-2023-plea-deal-report?amp=1
• https://www.fincen.gov/news/news-releases/fincen-announces-largest-settlement-us-treasury-department-history-virtual-asset
• https://ofac.treasury.gov/recent-actions/20231121
• https://www.binance.com/en/square/post/372112482033