In brief
- Leaked internal data suggest that Binance failed to prevent 13 suspicious accounts from operating after its November 2023 settlement with the U.S.
- The suspicious accounts have moved funds worth $144 million since November 2023, and $1.7 billion since 2021.
- The settlement established a five-year FinCEN monitorship of Binance, with monitors responsible for ensuring that the exchange complies with its new obligations.
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., according to a report in the Financial Times.
In November 2023, Binance settled with FinCEN and OFAC for sanctions violations and violations of the Bank Secrecy Act, agreeing to pay a total penalty of $4.368 billion.
The settlement also resulted not only in the resignation of then-CEO Changpeng Zhao, but also an agreement on Binance’s part to undertake a five-year FinCEN monitorship and introduce stricter compliance measures.
However, leaked internal files seen by the FT suggest that Binance failed to prevent suspicious accounts from transacting after November of 2023, with some such accounts moving eight- or nine-figure sums.
$144 million in suspicious transfers
The leaked internal data concern 13 suspicious accounts, which were involved in transactions worth a total of $1.7 billion since 2021, and worth $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, an account which received $93 million between 2022 and May of this year, and which transferred out a comparable amount in crypto.
One red flag associated with this particular account was that IP logs revealed it was accessed in Caracas at 3.56pm on February 24 of this year, and then in Japan at 1.30am the next day.
The 13 accounts assessed by the FT were registered in nations such as 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 were later frozen by Israel 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 Hizbollah, the Houthis in Yemen and a company with links to the Assad regime.
These four accounts were seized by Israel in May 2023, while OFAC placed sanctions on Al-Law in March of the following year.
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.
Decrypt has reached out to 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 suspended penalty of $150 million.
As noted above, the settlement did also impose a five-year FinCEN monitorship on Binance, with monitors supposed to “oversee remedial undertakings,” “conduct periodic reviews” and also “report to FinCEN, OFAC, and the CFTC on its findings,” as set out in the U.S. Treasury’s November 2023 press release.
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