Cayman Islands VCE (“Binance”) pays OFAC fine of $968,618,825 for multiple criminal actions.

Binance Holdings, Ltd. (“Binance”), a Cayman Islands virtual currency exchange with affiliates around the world, has agreed to pay $968,618,825 to settle its potential civil liability for 1,667,153 apparent violations of multiple sanctions programs administered by the Office of Foreign Assets Control (OFAC).

The settlements are part of a global agreement simultaneous with Binance’s resolution of related matters with the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC).

For over five years, between August 2017 and October 2022, Binance matched and executed virtual currency trades on its online exchange platform between U.S. person users and users in sanctioned jurisdictions or blocked persons.

Although Binance took steps to project an image of compliance, including by misleading third parties about its controls, senior Binance management knew of and permitted the presence of both U.S. and sanctioned jurisdiction users on its platform, and did so despite understanding that Binance’s trade matching algorithm could cause violations of OFAC-administered sanctions programs due to the presence of U.S. users on the platform.

In addition to disregarding known sanctions risks, Binance management also took steps to undermine its own compliance function, encouraging users to circumvent the company’s own ostensible controls.

The violations include failure to implement programs to prevent and report suspicious transactions with terrorists — including Hamas’ Al-Qassam Brigades, Palestinian Islamic Jihad (PIJ), Al Qaeda, and the Islamic State of Iraq and Syria (ISIS) — ransomware attackers, money launderers, and other criminals, as well as matching trades between U.S. users and those in sanctioned jurisdictions like Iran, North Korea, Syria, and the Crimea region of Ukraine.

By failing to comply with AML and sanctions obligations, Binance enabled a range of illicit actors to transact freely on the platform.

• “Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform,” 

As an MSB, Binance was required to report suspicious transactions to FinCEN through suspicious activity reports (SARs).

FinCEN’s investigation revealed that Binance’s former Chief Compliance Officer told personnel that the CEO’s policy was to not report such activity, and Binance never filed a single SAR with FinCEN. Binance wilfully failed to report well over 100,000 suspicious transactions that it processed as a result of its deficient controls, including transactions involving terrorist organizations, ransomware, child sexual exploitation material, frauds, and scams. 

• Terrorist Financing. Binance failed to report to FinCEN transactions associated with terrorist groups including Al Qaeda, the Islamic State of Iraq and Syria (ISIS), Hamas’ Al-Qassam Brigades, and Palestinian Islamic Jihad (PIJ). 
• Ransomware. Despite being one of the largest receivers of ransomware proceeds and transacting in millions of dollars of ransomware proceeds from attacks involving at least 24 different strains of ransomware, Binance failed to report these transactions.
• Child Sexual Abuse Materials. Binance never reported transactions with websites devoted to selling child sexual abuse materials, including Dark Scandals.
• Darknet Markets, Scams, and Other Illicit Activity. Despite sending and receiving virtual assets proceeds from large-scale hacks, account takeovers, and darknet markets dealing in illegal narcotics, counterfeit and fraud-related goods and services, as well as other illegal contraband, Binance never reported any such transactions. 

In order to fill the gap in reporting to law enforcement related to these and other types of illicit activity, Binance has agreed to a lookback to identify and report to FinCEN the suspicious transactions that it processed and wilfully failed to report.

Source

• https://home.treasury.gov/news/press-releases/jy1925
• https://www.fincen.gov/news-room/enforcement-actions
• The public settlement agreement, https://ofac.treasury.gov/system/files/2023-11/20231121_binance_settlement.pdf
• See the OFAC web post here. https://ofac.treasury.gov/system/files/2023-11/20231121_binance.pdf