Binance Employees Trained Users to Bypass KYC and AML Rules (Report)

On March 23, CNBC reported that a group of Binance angels shared techniques that allow users to bypass the platform’s KYC, residency, and verification systems.

CNBC confirmed the information by reviewing hundreds of messages posted on a Discord server and a Telegram group controlled and operated by Binance, apparently spanning from 2021 to March 2023.

Crypto Is Banned In China, But Binance Employees And Volunteers Tell People How To Get Around The Ban https://t.co/ddssYTwimH

-CNBC (@CNBC) March 24, 2023

KYC? What KYC?

According to CNBC, several Binance employees and “angels” (volunteers trained by the exchange to promote its use) provided video guides and tutorials showing the steps for users to forge bank documents and provide fake addresses when signing up for the platform.

The employees even demonstrated techniques to falsify their country of residence to obtain Binance debit cards.

“A person who used the handle Yaya and identified himself as a Binance employee told them to activate their VPN and register as a resident of Taiwan, and then change their nationality to China. The employee also suggested avoiding the use of VPN nodes in the United States, Singapore, and Hong Kong.”

The report also revealed that many users in China were able to access Binance services despite the country’s ban on cryptocurrency exchanges since 2017 and the use of digital assets since 2021.

Binance is investigating the report

CNBC stated that “the techniques shared with and between clients also call into question the effectiveness of Binance’s anti-money laundering efforts,” casting doubt on the exchange’s ability to ensure that its clients do not engage in illegal money laundering activities. money or terrorist financing.

In addition, several regulatory experts, including Sultan Meghji, a professor and former FDIC chief innovation officer, raised concerns about Binance’s ability to comply with KYC and AML regulations. They indicated that such reports raise regulatory concerns about the platform, as it could be enabling transactions by terrorists or criminals from North Korea or Russia.

“If I had an eight out of 10 concern about Binance from a regulatory perspective and from a national security perspective, this puts it at a 10 out of 10. […] I think explicitly about the national security implications of how terrorists, criminals, money launderers, cyber people in North Korea, Russian oligarchs, etc., could use this to gain access to this infrastructure.”

For his part, Jim Richards, anti-money laundering executive at Wells Fargo, emphasized that “techniques to circumvent Binance’s KYC controls could have implications beyond China,” precisely because the exchange could be supporting operations from other sanctioned countries in silence. .

According to a Binance spokesperson, the exchange has already taken action against employees who may have violated the company’s internal policies, making prohibited recommendations and going against its rules. Employees who violate these policies face audits and can be immediately terminated.