Due to concerns over the violation of its Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations, the Australian Transaction Reports and Analysis Centre (AUSTRAC) has ordered Binance to carry out an audit. The regulator communicated the directive to the local arm of the global exchange operating in Australia on Friday.
As part of the instruction, the regulator demands that the crypto exchange hire an external auditor to carry out the exercise. AUSTRAC, in a statement, said it made the decision after discovering some shortcomings in the exchange’s AML and CTF systems.
Meanwhile, emerging indications established that the latest regulatory move is an oversight review procedure rather than enforcement. According to AUSTRAC, the increasing relevance of cryptocurrencies has made them an important sector of the Australian economy, demanding close surveillance.
The chief executive officer of AUSTRAC, Brendan Thomas said a risk assessment carried out by the regulator last year discovered the growing vulnerability of cryptocurrencies to criminal usage. Additionally, the regulator disclosed its worries about the high staff turnover, poor local resourcing, and senior management supervision at the cryptocurrency exchange.
As a result of these factors, the regulator said it is concerned about the compliance level of the cryptocurrency exchange. AUSTRAC said Binance is operating across borders in a sector with high risk.
Therefore, the CEO added that it expects the trading platform to have a good customer identification system and a strong transaction monitoring system. So far, Binance Australia has acknowledged the instructions of the regulator.
How Binance has been at loggerheads with regulators in Australia
Binance in the last few years has found itself in trouble with regulators in Australia. In early 2023, the Australian Securities and Investment Commission (ASIC) ordered the cryptocurrency exchange to close its derivatives offerings.
Then, operatives from ASIC ransacked the Australian offices of the cryptocurrency exchange as part of the investigation into its derivatives business. During the year, Binance bowed to pressure by suspending Australian dollar fiat money services owing to how Zepto, its local payment service provider received instructions to cut ties with the trading platform.
The exchange bemoaned how it was suddenly cut off from Australia’s local banking network without due notice. Thereafter, around late 2024, the ASIC took legal action against Binance, accusing the exchange of failing to protect customers.
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