A Reuters report has revealed that Binance boss was warned by the senior execs over a weak KYC policy before the company faced a barrage of scrutiny from various regulatory bodies.
Before Facing Regulatory Issues
The news agency further revealed that aside from making official reports concerning the matter, these senior execs also brought the matter to the attention of the Binance boss personally. But he dismissed their suggestions. The popular crypto exchange has been having issues with various regulators globally. Regulators in the UK, Singapore, Malaysia, Italy and many other nations have alleged that Binance’s KYC policy is way off the acceptable standard.
Reuters investigation uncovered what happened behind the scenes as the exchange and regulators rub shoulders over the former’s KYC policy. The news agency also discovered that some Karen Leong and Samuel Lim were aware that the firm’s KYC policy was not up to the acceptable regulator standard.
Malta, The Origin of Binance Regulatory Woes
Reuters also published various conversations between Leong and the Binance boss (CZ) with the former notifying his boss regarding the KYC and his criticism of the founder’s plan to start running a fiat-crypto transaction. Despite applying for an operating license in Malta late october 2018, Binance didn’t follow through with the application procedure.
The exchange did not follow through mainly because the exchange boss discovered Malta’s strict financial disclosure and anti-money laundering policy. Even though Binance was informing its clients that it is legally approved to operate in the country, the Maltese financial watchdog issued an official announcement rebuffing the exchange’s claims.
Collaborating With Fraudsters in Germany
The Reuters investigation also revealed that Binance received several letters from German police and lawyers over allegations of fraud committed on the exchange’s platform. A German-based fintech company (CM-Equity) claimed that Binance only performed due diligence of any user making at least a $11K deposit.
Strangely, Binance increased this threshold six months ago and even informed CM-Equity of its decision. The investigation further revealed that German police and regulator sent multiple letters to Binance to seek its help in confirming stolen funds laundered through the exchange.
However, Binance did not accede to their request. Also, German police discovered that a suspected jihadist had made some crypto transactions on Binance, they sought the help of Binance in uncovering the identity of this culprit. Sadly, Binance turned down their request.
While Holland and Japan warned its citizens over making transactions on Binance, Italy and Cayman Islands released an official statement to refute any claim that the exchange has an operating license. Malaysia and the United Kingdom also accused Binance of operating without the appropriate license.
Even though the exchange announced that it is making efforts in mending its relationship with these regulators, there are no proof that shows that Binance and these regulators now have a cordial working relationship. After putting Binance on an investor warning list, Singapore regulator affirmed that Binance no longer seeks an operational license even though the exchange had started the process four weeks before these announcements.
