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Binance beefs up its compliance strategy amid UK regulatory crackdown

Binance is the largest crypto exchange and has come under regulatory action in the UK. Photo: Getty
Binance is the largest crypto exchange and has come under regulatory action in the UK. Photo: Getty

Binance has announced it will be using a product called CipherTrace Traveler, in an attempt to improve its compliance strategy.

The tool will enable one of the world’s largest bitcoin (BTC-USD) exchanges to comply with the global 'travel rule' implemented by two agencies: the Financial Crimes Enforcement Network in the US, and the intergovernmental Financial Action Task Force.

This regulation requires 'Virtual Asset Service Providers' (VASP) such as cryptocurrency exchanges, digital wallet providers and some financial institutions dealing with crypto assets to ensure that certain customer data is disclosed and transferred between counterparties as a part of the cryptocurrency transaction.

The news comes as Britain’s financial watchdog issued a warning to consumers that Binance is not permitted to undertake regulated activities in the UK.

Over the weekend the Financial Conduct Authority ordered Binance Markets to remove all advertising and financial promotions by 30 June.

This was followed by an FT report that Binance customers couldn't withdraw or deposit pounds using Faster Payments, one of the main UK payments systems. Binance said on its website the platform was suspended for maintenance.

Read more: Why the UK banned Binance and what it means for your crypto assets

Meanwhile, in its announcement Binance said Traveler will support its compliance commitment to "detecting bad actors and preventing their use of the Binance platform", as the industry experiences growing numbers of decentralised finance hacks and frauds."

Traveler simplifies the user experience by automatically identifying VASP-to-VASP transfers and recipient VASP by scanning addresses associated with incoming cryptocurrency transactions. It ensures that sensitive transaction confirmations are only shared with other travel rule-compliant institutions to prevent data leakage and to preserve confidentiality.

CipherTrace released Traveler in March and Binance is among the first exchanges to deploy it.

“We are continuing to invest in our compliance program and technology to further strengthen our standards,” said Samuel Lim, chief compliance officer of Binance.

“We are committed to providing a superior product for our users – one that is secure, decentralised, and meets global compliance standards.”

CipherTrace CEO Dave Jevans said: "We are confident that Traveler will help Binance to continue to meet the highest standards for global anti-money laundering compliance, particularly as regulation of VASPs tightens in jurisdictions around the world.

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